The European Central Bank has fined Goldman Sachs a hefty €6.63 million for understating its capital requirements between 2019 and 2021, the ECB announced on Monday.
The US financial giant was fined because it “breached credit risk reporting rules,” the ECB said in a statement.
For eight consecutive quarters, in 2019, 2020 and 2021, the bank reported lower credit risk-weighted assets than it should have, the monetary institution added.
The bank “misclassified corporate exposures,” assigning them a lower risk weighting than prescribed by banking rules, and deficiencies in internal controls prevented the timely detection of this error, BCE observed.
Goldman Sachs said in a statement that it recognised “the critical importance of (its) regulatory reporting obligations,” assuring that it had “taken all necessary steps to fully address this issue”.
A Goldman Sachs spokesman said in an email to French news agency AFP that the bank had cooperated closely with the ECB throughout the process and had fully resolved the issues.
An understatement of risk-weighted assets means the bank did not calculate its capital requirements correctly.
Capital ratios are key indicators of a bank’s soundness and ability to absorb losses in the event of market turmoil, as required since the 2008 financial crisis and the ECB’s subsequent tightening of supervision.
These rules have made Europe’s banking sector more robust, the ECB recalled recently amid fears of contamination from the difficulties faced by several US banks.