European Central Bank Fines Crédit Mutuel for Underestimating Credit Risk




The European Central Bank (ECB) has imposed two administrative penalties totaling €3.54 million on Confédération Nationale du Crédit Mutuel for using a method leading to underestimating the credit risk on certain loans, as stated by the ECB in a statement released on Thursday.


According to the ECB, which oversees 113 significant banks in Europe, Crédit Mutuel failed to apply certain requirements, known as "floors," set by the central bank's rulebook when calculating the risk of certain loan portfolios using its internal models between May 2021 and April 2022.


As a result, the bank provided misleading information about its capital strength and its ability to absorb losses.


"This constitutes serious negligence as said floors were clearly stipulated in the relevant ECB decisions, and the bank omitted to take obvious actions to avoid the breaches. It also prevented the ECB from having a comprehensive view of the bank’s risk profile," stated the ECB.


Crédit Mutuel Group, based in France, ranked as the tenth largest bank in Europe by assets in 2023, according to S&P Global.


The bank has the option to contest the ECB's decision before the Court of Justice of the European Union. In response to AFP, the bank mentioned that it "takes note of the ECB's decision, which concerns an old file, and is not considering any additional procedure."







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