The European Central Bank (ECB) has imposed an administrative fine of 12.2 million euros on JPMorgan for “systematic misrepresentation.”
The ECB has imposed a “gross negligence” penalty on JP Morgan SE, the European subsidiary of the world's largest bank, JPMorgan.
In the ECB's statement, it was claimed that JPMorgan's European subsidiary declared its risk-weighted assets to be below legal limits between 2019 and 2024. It was claimed that the bank misclassified the company's credit exposures and underestimated its capital requirements by calculating risk weights lower than those required by banking regulations.
In the statement indicating that the violation was systemic, the following details were shared: “The financial institution in question misclassified its corporate risk for 15 fiscal quarters and determined the risk level to be lower than it should have been. Additionally, the institution improperly excluded certain transactions when calculating counterparty risk in derivatives contracts for 21 consecutive quarters. These errors, stemmed from structural deficiencies in the internal audit process, constitutes ‘gross negligence’.”
In the statement, it was stated that as a result of the investigations, a total administrative fine of 12.2 million euros was imposed on JPMorgan's German-based European bank, JP Morgan SE, on the grounds that the bank had incorrectly reported capital requirements and miscalculated risk-weighted assets. The ECB emphasized that JPMorgan concealed its true risk profile through these inaccurate statements and reflected a stronger capital adequacy ratio than the actual situation.
The statement stated that the US bank has the right to appeal to the Court of Justice of the European Union against the administrative decision.
