ECB Slaps JPMorgan with USD14.34M Fine
According to the ECB, the bank reported lower risk-weighted assets than required between 2019 and 2024. This discrepancy arose because the bank misclassified corporate exposures for 15 consecutive quarters and "applied a lower risk-weight for credit risk to them than banking rules prescribe."
Additionally, JPMorgan "unduly excluded certain transactions for 21 consecutive quarters when calculating risk-weighted assets for its credit valuation adjustment risk," the central bank noted.
The ECB categorized the breaches differently: it deemed the credit risk violation "severe" and the credit valuation adjustment risk infraction "moderately severe," citing "serious negligence driven by evident deficiencies in its internal processes."
By reporting incorrect figures to the European Central Bank, the bank hindered the regulator from gaining a full view of its risk profile. The miscalculations led to inflated capital ratios, which are crucial measures of a bank’s ability to absorb losses. "As a result of underestimating its risk-weighted assets, JPMorgan reported higher capital ratios than it should have done," the ECB explained.
The bank retains the right to contest the penalties at the Court of Justice of the European Union.
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