2024-03-21 19:54:25
By Le Figaro with AFP
Published 3 hours ago, Updated 1 hour ago
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The bank used a method leading to underestimating the credit risk on loan portfolios.
The European Central Bank fined the group 3.54 million euros Mutual credit for having used a method leading to underestimating the credit risk on loan portfolios, she announced Thursday. This sum results from two sanctions relating to the bank’s use of internal models, indicates the ECB in a press release.
“Between May 2021 and April 2022, when using its internal models to determine its risk-weighted assets, the bank did not apply the floors set by the ECB to calculate the credit risk of certain exposures”adds the monetary institution, explaining that this prevented it from having “an overview of the bank’s risk profile”.
A decision soon to be contested?
Understating risk-weighted assets means the bank reported a key ratio («Common Equity Tier 1») higher than it should have. This ratio is an important indicator of the strength of a bank’s capital and its ability to absorb losses.
The ECB, sole supervisor of some 115 largest banks in the euro zone, has already imposed around twenty sanctions against private establishments. The bank can challenge the ECB’s decision before the Court of Justice of the European Union.
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