ISTANBUL

The European Central Bank has imposed two administrative penalties totaling €12.18 million ($14.34 million) on JPMorgan for reporting wrongly calculated risk-weighted assets.

The bank reported lower risk-weighted assets than required between 2019 and 2024, the ECB stated on Thursday.

This occurred because the bank misclassified corporate exposures for 15 consecutive quarters and applied a lower risk-weight for credit risk to them than banking rules prescribe.

JPMorgan also unduly excluded certain transactions for 21 consecutive quarters when calculating risk-weighted assets for its credit valuation adjustment risk.

The central bank classified the credit risk breach as "severe" and the credit valuation adjustment risk breach as "moderately severe" due to the bank committing both with serious negligence driven by evident deficiencies in its internal processes.

The bank reported wrongly calculated figures to the European Central Bank, which prevented the authority from having a comprehensive view of its risk profile.

Capital ratios are key indicators of a bank's capital strength and its ability to absorb losses, and as a result of underestimating its risk-weighted assets, JPMorgan reported higher capital ratios than it should have done.

The bank has the right to challenge the decision before the Court of Justice of the European Union.