ECB fines France’s Credit Agricole over capital reserves

The European Central Bank announced on Monday (20 August) that it had fined French lender Credit Agricole a total of €4.8 million over past irregularities in the way it declared its capital reserves, Reuters reports.

The ECB said in a statement it slapped Credit Agricole (CA) itself with a €4.3 million fine. The bank’s corporate and investment banking arm must pay €300,000 and its consumer finance unit €200,000.

The fines relate to the manner in which CA classified some of its assets under the “CET1” heading in public statements during 2015 and 2016.

“The penalty has been imposed in respect of the bank classifying capital instruments as CET1 instruments during three consecutive quarterly reporting periods and two consecutive public disclosures in 2015 and 2016 without having obtained the prior permission of the competent authority,” the ECB said.

Banks must hold a certain amount of so-called CET1 capital in relation to their exposure to financial risks, as a buffer to absorb potential losses.

Regulators from around the world introduced tougher targets for the capital cushions in the wake of the financial crisis, most recently in the “Basel III” package of rules finalised last December.

CA has the option of challenging the ECB’s ruling at the Luxembourg-based European Court of Justice.

“Credit Agricole has taken note of the complaints… and reserves the option of appealing,” the group said on Monday.

It is the third time that the ECB’s banking supervisory arm, the Single Supervisory Mechanism, has imposed such fines.

Last year, it fined Italy’s Banco Popolare di Vicenza €11.2 million and Ireland’s Permanent TSB €2.5 million.

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