Key Points:
- The European Central Bank fined JPMorgan 12.18 million euros.
- The bank miscalculated risk-weighted assets for 15 consecutive quarters.
- Errors occurred between 2019 and 2024 regarding corporate exposure.
- JPMorgan says it self-reported the mistake and fixed it.
The European Central Bank (ECB) announced on Thursday that it has fined the European arm of JPMorgan. The penalty amounts to 12.18 million euros, or approximately $14.32 million. Regulators issued the fine because the bank failed to report its capital requirements correctly for several years.
According to the ECB, the bank reported lower risk numbers than it should have between 2019 and 2024. This was not an isolated incident. The central bank stated that the errors persisted for 15 consecutive quarters. During this time, JPMorgan misclassified certain corporate exposures. This mistake led them to apply a lower “risk weight” for credit risk than banking rules allow.
Basically, banks must hold a specific amount of money in reserve based on how risky their loans and assets are. By calculating these assets as safer than they actually were, the bank underreported the risk on its books. The ECB also noted that the bank incorrectly excluded certain transactions when doing the math for these risk-weighted assets.
JPMorgan accepted the decision and stated that the problem is already resolved. A spokesperson for the bank pointed out that they were the ones who originally found the error. “J.P. Morgan SE proactively identified and self-reported the issues, which have now been fully remediated,” the spokesperson said.
The bank wants to assure investors that this was a reporting failure, not a financial one. The spokesperson emphasized that the European division always maintained strong capital buffers to cover any potential losses. They insisted that their overall approach to managing capital remains prudent and robust.
While the bank has accepted the fine, they technically have the option to challenge the decision at the Court of Justice of the European Union. However, since the bank self-reported the issue and says it is fixed, a legal fight appears unlikely. This fine serves as a reminder that the ECB is watching closely to ensure all financial institutions follow strict reporting standards.
