The European Central Bank has fined J.P. Morgan SE, the U.S. bank's European arm, 12.18 million euros after determining the firm reported lower risk-weighted assets than required, the ECB said in a statement on Thursday.
According to the regulator, the underreporting occurred over a multi-year stretch. "Between 2019 and 2024, the bank reported lower risk-weighted assets than it should have done," the ECB said. The central bank identified two principal problems: the misclassification of corporate exposures and the exclusion of particular transactions in the computation of risk-weighted assets.
In its decision the ECB noted that "for 15 consecutive quarters, the bank misclassified corporate exposures and applied a lower risk-weight for credit risk to them than what banking rules prescribe." The regulator also said the bank "unduly excluded certain transactions when calculating risk-weighted assets."
The administrative penalty may be contested at the Court of Justice of the European Union, the ECB added.
J.P. Morgan SE acknowledged the ECB's decision and said it had addressed the matter internally. In a statement, the bank said: "J.P. Morgan SE proactively identified and self-reported the issues, which have now been fully remediated." The firm reiterated its view on capitalization: "JPMSE has consistently maintained strong capital buffers, and our robust, prudent approach to capitalization remains unchanged."
The ECB fine equates to 12.18 million euros, which is approximately $14.32 million using the conversion stated with the decision. ($1 = 0.8506 euros)
The regulator's findings focus on technical capital-reporting practices rather than an explicit finding of broader solvency or liquidity shortfalls. The bank's acknowledgment that it self-reported and has remediated the issues frames the action as corrective in nature, while leaving open the option of legal challenge by the institution at the EU's Court of Justice.
Summary
The ECB imposed a 12.18 million euro penalty on J.P. Morgan SE after concluding the bank understated risk-weighted assets from 2019 through 2024 by misclassifying corporate exposures for 15 consecutive quarters and excluding certain transactions from calculations. J.P. Morgan SE said it self-reported and has fixed the problems and stressed its capital buffers remain strong. The ECB decision can be appealed to the Court of Justice of the European Union. ($1 = 0.8506 euros)