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CSSF fines European Depositary Bank almost €240,000

CSSF fines European Depositary Bank almost €240,000

by John MONAGHAN 2 min. 29.07.2021 From our online archive
Penalty issued by Luxembourg's financial regulator follows "severe infringements" of two banking laws
CSSF headquarters in Luxembourg City
CSSF headquarters in Luxembourg City
Photo credit: Anouk Antony

Luxembourg’s financial regulator has imposed a fine of almost €240,000 on the European Depositary Bank (EDB) for “severe infringements” of two laws related to fund management.

The CSSF (Commission de Surveillance du Secteur Financier) said the fine followed an on-site inspection carried out in 2019 and last year. 

The regulator issued the financial penalty at the start of June, but only publicly announced it on Tuesday.

EDB has existed in the Grand Duchy since 1973, initially as a subsidiary of Hamburg-based private bank M.M.Warburg & CO . In 2017 it was acquired by the Apex Group, and was renamed two years ago.

"The fine ... relates to historical activities carried out in 2018 and 2019 in relation to the migration of the portfolios from the acquired entities," a spokesperson for the bank said in an email. 

"The Group has invested substantially in the modernisation of the EDB business and restructuring of processes since its acquisition by the Apex Group in 2019. The Group remains committed to upholding the highest of risk, compliance and governance standards," the spokesperson added.
The sanction was divided into two parts, with €65,200 related to rules governing alternative investment fund managers and the larger penalty of €174,600 connected to failings in retail funds, or UCITS.

The regulator said the visits to the bank had uncovered “severe infringements to the provisions applicable to the depositary function” in both laws.

“The deficiencies detected relate to the obligations of safekeeping for other assets, the oversight duties, the extent of outsourcing of depositary related activities, the sound and prudent management of the depositary activities and the due diligence applied in the selection of a delegate for the safekeeping of financial assets,” the CSSF said.

The CSSF ranked second after Bulgaria out of 30 countries in Europe for issuing sanctions related to a different set of rules for market behaviour last year, according to a report published last week by the European Securities and Markets Authority (ESMA). However, many of the penalties it imposed were small, with just €66,000 handed out in total fines for 108 breaches.

Headquartered in Munsbach, close to the capital, EDB maintains branches in Malta, London and Dublin and holds fund and securitisation structures with a total volume of €109.7 billion, according to its website.

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