The European Central Bank (ECB) announced this Friday that it had imposed a fine of 10.4 million euros on BNP Paribas Fortis. The bank has deliberately misreported its risk profile for years.
Between 2014 and 2021, for 31 consecutive quarters, BNP Paribas Fortis undervalued risk-weighted assets by “its subsidiary in Belgium“. Risk-weighted assets help determine the minimum amount of capital required within a bank based on the level of risk.
The bank relied on the use of internal models to calculate these risk-weighted assets, although it identified serious shortcomings. According to the ECB, it knowingly communicated incorrectly calculated figures to the competent authorities, which did not provide a complete picture of its risk profile.
The bank only informed the ECB after new models were developed, seven years after the shortcomings were identified. BNP Paribas Fortis may challenge the ECB fine before the European Court of Justice in Luxembourg.
In a reaction, the bank emphasizes that this administrative fine concerns the reporting of the factoring activities of BNP Paribas Fortis and therefore in no case client files. She specifies that a CRR regulation (which defines prudential requirements for financial institutions) amended in 2014 led the bank to review the reporting model for its factoring activities.
This review has been carried out and the bank says it has been fully compliant as of 2021.”Considering BNPPF's total risk exposure, BNP Paribas Fortis significantly exceeded the ratios around the minimum capital requirements for each year of the relevant period“, she assures.
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