The European Central Bank (ECB) has imposed a fine of 12.2 million euros ($14.4 million) on JPMorgan’s German branch, JPMorgan SE, for significant breaches in capital reporting requirements between 2019 and 2024. This marks the largest penalty ever levied by the ECB for such an infringement.
The investigation found that the US investment bank misclassified certain transactions and excluded others from its risk calculations. These errors led the bank to report capital buffers that were larger than its actual holdings. Capital buffers are essential reserves of cash or highly liquid assets that banks must maintain in proportion to their risky assets, ensuring financial stability. The misreporting artificially lowered the perceived risk profile on JPMorgan’s books, potentially freeing capital that could have been used for other investments.
The ECB stated that the breaches were committed with “serious negligence” due to “evident deficiencies in its internal processes.” It added that the bank’s internal controls failed to detect these errors in a timely manner. Regulatory capital reporting is fundamental to supervisory oversight, allowing authorities to assess a bank’s true resilience to financial shocks.
In a response to the penalty, a JPMorgan spokesperson confirmed the fine and acknowledged the issues. The bank noted that it had “proactively identified and self-reported” the problems, which have since been fully corrected. JPMorgan maintained that it “consistently maintained strong capital buffers” and that its “robust, prudent approach to capitalisation remains unchanged.”
This enforcement action comes just one week after the ECB fined France’s Credit Agricole 7.55 million euros for delays in assessing climate change-related financial risks. The consecutive penalties signal the ECB’s intensified scrutiny of banks’ compliance with both traditional prudential rules and emerging risks. For international lenders operating in the Eurozone, the case underscores the critical importance of accurate internal data systems and rigorous reporting controls to meet the ECB’s stringent supervisory standards. The fine serves as a deterrent, highlighting that regulatory capital integrity is non-negotiable for financial stability within the banking union.
