The European Central Bank imposed two administrative penalties totalling EUR 12.18 million on J.P. Morgan SE for reporting wrongly calculated risk-weighted assets, which led to misstated capital ratios and impaired the ECB’s view of the bank’s risk profile. Between 2019 and 2024, the bank reported lower risk-weighted assets than it should have done by misclassifying corporate exposures for 15 consecutive quarters and applying an inappropriately low risk weight for credit risk. For 21 consecutive quarters, it also unduly excluded certain transactions from the calculation of risk-weighted assets for credit valuation adjustment risk, which reflects the risk of counterparty default on derivative contracts. The ECB assessed both breaches as committed with serious negligence, citing deficiencies in internal processes and internal controls that did not detect the issues in a timely manner, and classified the credit risk breach as “severe” and the credit valuation adjustment risk breach as “moderately severe” under its penalty methodology. J.P. Morgan SE may challenge the ECB’s decision before the Court of Justice of the European Union.
European Central Bank 2026-02-19
European Central Bank imposes EUR 12.18 million in penalties on J.P. Morgan SE for misreporting risk-weighted assets
The European Central Bank fined J.P. Morgan SE EUR 12.18 million for misreporting risk-weighted assets, affecting capital ratios and risk assessments. The bank misclassified corporate exposures and excluded certain transactions from credit valuation adjustment risk calculations over several years. The ECB cited serious negligence and deficiencies in internal controls, classifying the breaches as severe and moderately severe.