The bank used a method which lead to it underestimating its exposure on loan portfolios.
For using a method leading to underestimating the credit risk on certain loans, “the European Central Bank (ECB) has imposed two administrative penalties totalling €3.54 million on Confédération Nationale du Crédit Mutuel”, said the ECB in a statement on Thursday.
According to the ECB, which oversees 113 significant banks in Europe, Crédit Mutuel did not apply certain requirements, so-called “floors”, set by the central bank’s rulebook when the lender calculated the risk of certain loan portfolios, using its internal models, between May 2021 and April 2022.
As a result, the bank reported 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,” said the statement.
France-based Crédit Mutuel Group counted as the tenth largest bank in Europe by assets in 2023, according to S&P Global.
The bank can contest the ECB’s decision before the Court of Justice of the European Union. In a statement to AFP, the bank said that it “takes note of the ECB’s decision which concerns an old file and is not considering any additional procedure”.
