The financial regulator in Malawi has accused a Malawian bank, which until last year was controlled by an Irish firm, of rule-breaking and has moved to revoke its licence.

Finance Bank Malawi, one of the east African country's fastest-growing financials, was closed down earlier this week by order of the Reserve Bank of Malawi.

Victor Mbewe, Reserve Bank governor, said he was revoking the licence of Finance Bank because it had contravened banking rules.

The status of his decision was uncertain last night, with Malawian newspaper the Nation reporting that the Malawian High Court had granted an injunction restraining the Reserve Bank from revoking the licence.

The newspaper quotes Finance Bank managing director Subramania Pillai as saying the punishment imposed by the Reserve Bank could have been "lighter".

Until 2004, some 96.05 per cent of Finance Bank's shares were owned by Finance Holdings (Corporation) Ltd, an Irish-registered company with an address in Dublin's Northumberland Road.

The shares were valued at £2.3 million (€3.34 million) at that stage.

A director of Finance Holdings, Jersey-based Paul Reed, said yesterday that the shares had been sold, having originally been held as an investment. The holding was not sold to another Irish entity, he added.

According to the 2003 annual return for Finance Corporation, filed at the Companies Office, all four of the company's directors - Mr Reed, Colin Walker, Paul Wojciechowski and Frank A Hayes - were, at that stage, British citizens living in Jersey.

The firm's auditors were also based in Jersey.

Accounts filed at the Companies Office for the company for 2003 state an intention to transfer all its assets and liabilities to a related company over the coming year. Finance Holdings, which had the principal activity of "investment holding", was then to be dissolved.

An earlier 30 per cent holding in a related bank, Finance Bank Zambia, was sold in the course of 2003.

Mr Mbewe declined to discuss the matter of revoking the Finance Bank's licence in detail yesterday.

It is believed, however, that the regulator has concerns over foreign-exchange dealings at the bank.

Telephone calls made to Finance Bank Malawi's offices yesterday were not answered.

A spokesman for the Irish Financial Services Regulatory Authority (Ifsra) said that it had not authorised or registered Finance Holdings in the Republic.

However, Ifsra will co-operate with the Reserve Bank of Malawi should any issues arise, the spokesman added. - Additional reporting, Reuters