The Bank of England has hit Qatar Islamic Bank's UK arm, QIB (UK), with a £1.38m fine, saying that it had "failed to meet some of the most basic regulatory standards."

Between June 2011 to December 2012, regulators at the UK's central bank said QIB did not undertake a regular assessment of its capital as required by rules in force at the time.

“In failing to assess, maintain and report on its financial resources for over a year, QIB failed to meet some of the most basic regulatory standards,” said Andrew Bailey, chief executive of the Prudential Regulation Authority (PRA).

Specifically, QIB failed properly to monitor and report to the regulator its total exposure to connected parties and in December 2011 was "significantly exposed" to a group of connected clients.

As a result, in the period that followed, exposures amounted to more than 25% of its capital assets, in breach of regulatory requirements.

The exposure figure indicates the extent to which a lender, in this case QIB, is exposed to the risk of loss in the event of the borrower's default.

“QIB’s failures in this regard were serious, which is why we considered it appropriate in this case to impose a fine,” Bailey added.

The PRA added it recognises that, since December 2012, QIB has undergone significant restructuring and an entirely new board is now in place. 

Guy Priestley, acting chief executive of QIB (UK), said the fine would not affect the operations of the business.

QIB (UK) is only the fourth firm to be fined by the PRA; most of the fines in the City are levied by the Financial Conduct Authority.