- PRESS RELEASE
ECB sanctions Goldman Sachs Bank Europe for misreporting capital needs
15 May 2023
- Goldman Sachs Bank Europe breached credit risk reporting rules
- ECB imposes penalty of €6.63 million
The European Central Bank (ECB) has imposed an administrative penalty of €6.63 million (€6,630,000) on Goldman Sachs Bank Europe SE after the bank reported wrongly calculated risk-weighted assets for credit risk.
In 2019, 2020 and 2021, for eight consecutive quarters, the bank reported lower risk-weighted assets for credit risk than it should have done. This occurred because the bank misclassified corporate exposures and applied a lower risk-weight to them than what banking rules prescribe. Deficiencies in internal controls prevented the bank from detecting this mistake in a timely manner. The bank reported wrongly calculated figures to the ECB, therefore preventing the ECB from having a comprehensive view of its risk profile.
Risk-weighted assets are a measure of the risks a bank has on its books. They serve as a basis for banks to calculate their capital needs. Underestimating risk-weighted assets means the bank did not calculate its capital needs properly and reported higher capital ratios than it should have done. Capital ratios are key indicators of a bank’s capital strength and its ability to absorb losses.
When deciding on the amount of a penalty to sanction a bank, the ECB applies its Guide to the method of setting administrative pecuniary penalties. Out of the severity categories “minor”, “moderately severe”, “severe”, “very severe” and “extremely severe”, the ECB classified this breach as “severe”. More details on sanctions imposed by the ECB are available on our supervisory sanctions web page.
The bank may challenge the ECB’s decision before the Court of Justice of the European Union.
For media queries, please contact François Peyratout, tel.: +49 172 8632 119.
- The ECB’s power to impose sanctions stems from Article 18(1) of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions.
- The Decision imposing a sanction may be challenged before the Court of Justice of the European Union under the conditions and within the time limits provided for in Article 263 of the Treaty on the Functioning of the European Union.