European Central Bank Banking Supervision imposed an administrative penalty of EUR 405,000 on AS LHV Group for reporting miscalculated consolidated risk-weighted assets for market risk, which led to understated capital requirements for foreign exchange exposures. For eight consecutive quarters from the second quarter of 2022 to the first quarter of 2024, the bank understated market risk risk-weighted assets by incorrectly including an intragroup British pound (GBP)-denominated exposure when calculating its net spot GBP position. The breach was assessed as committed with serious negligence due to significant deficiencies in risk management and internal controls, and was classified as 'moderately severe' under the ECB’s public penalty guide. AS LHV Group may challenge the ECB’s decision before the Court of Justice of the European Union.
European Central Bank - Banking Supervision 2025-11-04
European Central Bank imposes EUR 405,000 penalty on AS LHV Group for misreporting market risk capital requirements
The European Central Bank Banking Supervision fined AS LHV Group EUR 405,000 for misreporting consolidated risk-weighted assets for market risk, understating capital requirements for foreign exchange exposures. The breach, over eight quarters from Q2 2022 to Q1 2024, involved incorrect inclusion of an intragroup GBP exposure and was deemed 'moderately severe' due to serious negligence in risk management. AS LHV Group may appeal the decision to the Court of Justice of the European Union.