The European Central Bank (ECB) has imposed a fine of €10.4 million on BNP Paribas Fortis for deliberately misrepresenting its risk profile for years, the ECB announced on Friday.
For 31 consecutive quarters, between 2014 and 2021, BNP Paribas Fortis undervalued the risk-weighted assets of its subsidiary in Belgium. Risk-weighted assets are used to 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, even though it identified serious shortcomings. According to the ECB, it knowingly communicated incorrectly calculated figures, which did not provide a complete picture of its risk profile, to the competent authorities.
The bank only informed the ECB after new models had been developed, seven years after the shortcomings had been identified.
BNP Paribas Fortis may challenge the ECB's fine before the European Court of Justice in Luxembourg.
In a reaction, the bank stressed that the fine related to the reporting of BNP Paribas Fortis's factoring activities and was therefore in no way related to client files.
It pointed out 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 since 2021.
"If we consider BNPPF's total risk exposure, BNP Paribas Fortis has significantly exceeded the ratios around the minimum capital requirements for each year of the period in question," it assured.
