PRA has fined QIB (UK) plc £1,384,950 for breaches of Principles 2 and 3 in 2011 and throughout 2012 as they then applied to banks. PRA determined QIB to have failed to:

  • identify that it was required to comply with the Overall Pillar 2 Rule, including the requirement for a firm to undertake a regular assessment of its capital requirements;
  • report its large exposures correctly to the then FSA; and
  • ensure that the total amount of its exposures to connected clients did not exceed 25% of its regulatory capital.

By failing properly to identify its requirements in respect of the Overall Pillar 2 Rule and large exposures, QIB failed to identify that more than 25% of its capital had been lent to a single group of borrowers. When this group entered administration, QIB had to provision for the full amount outstanding, which had the effect of removing over 25% of its capital base and leaving QIB dangerously under-capitalised. This was resolved only by QIB’s shareholder quickly injecting further capital into QIB. QIB received a 30% stage one discount to this fine due to an early settlement having been reached with PRA. (Source: PRA fines QIB £1.4 million for financial resources failures)