The European Central Bank on Thursday fined JPMorgan €12.2 million ($14.4 million) for misreporting risk, marking the largest penalty imposed by the institution to date.
In a statement, the ECB said that between 2019 and 2024, JPMorgan misclassified certain transactions and excluded others from its risk calculations. As a result, the bank reported capital buffers that appeared stronger than they actually were.
“The bank committed both breaches with serious negligence, driven by evident deficiencies in its internal processes,” the ECB said.
It added that the bank’s internal controls failed to detect the breaches in a timely manner.
Under banking regulations, financial institutions are required to maintain a specific level of cash or highly liquid assets relative to their risky holdings. By understating the proportion of risky assets on its books, JPMorgan would have appeared to free up capital for other investments.
The fine follows another enforcement action by the ECB last week, when it imposed a €7.55 million penalty on Credit Agricole for delays in assessing climate change-related risks as requested by the central bank.
Responding to the sanction, a spokesperson for JPMorgan said the bank acknowledged the fine issued to JPMorgan SE in relation to capital reporting requirements.
“JPMorgan SE proactively identified and self-reported the issues, which have now been fully remediated,” the spokesperson said in a statement sent to AFP.
The bank maintained that it had “consistently maintained strong capital buffers” and emphasised that its prudent approach to capitalisation remains unchanged.
