Bank of Ireland Mortgage Bank

Background to breach of 10% cap The breach by the Firm of the 10% cap set out in Section 31(3) arose as a result of the downgrading of Bank of Ireland’s long term credit rating in April 2011. The Firm’s credit transaction assets consisted of deposits in Bank of Ireland. This downgrade in Bank of Ireland’s rating led to certain deposits held by the Firm in Bank of Ireland being reclassified as credit transaction assets. The result of this was that the percentage of credit transaction assets held by the Firm (being assets held outside the Pool) exceeded the 10% cap set out in Section 31(3). This breach of the legislation continued from 4 April 2011 to 20 December 2011. On being made aware of the breach by the Central Bank the Firm immediately took steps to return to compliance with Section 31(3), which occurred on 21 December 2011. 3 Penalty decision factors The penalties imposed in this case reflect the importance the Central Bank places on compliance with all aspects of the Asset Covered Securities legislation and adequate systems and controls to ensure such compliance.