The European Central Bank (ECB) has imposed an administrative penalty of €6.2 million on BofA Securities Europe SA, a subsidiary of Bank of America, for reporting wrongly calculated risk-weighted assets for market risk, the ECB announced on 27 March 2026.
According to the ECB, the bank reported lower risk-weighted assets for market risk than it should have for six consecutive reporting periods between 2022 and 2024. In its calculations, the bank included sovereign bond option positions under the internal models approach despite being aware that these were not covered by its supervisory permission. The ECB said the bank intentionally breached market risk reporting requirements.
CAPITAL RATIO OVERSTATED
Risk-weighted assets serve as the basis on which banks calculate their capital requirements. By underestimating them, the bank did not calculate its capital requirements correctly and reported a higher Common Equity Tier 1 (CET1) ratio than it should have done, the supervisor said. The CET1 ratio is a key indicator of a bank's capital strength and its ability to absorb losses.
In setting the amount, the ECB applied its guide to the method of setting administrative pecuniary penalties. Of the five severity categories, ranging from minor to extremely severe, it classified the breach as severe. The bank has the right to challenge the decision before the Court of Justice of the European Union.
RECENT ENFORCEMENT
The penalty follows the two penalties totalling €12.18 million that the ECB imposed on J.P. Morgan SE, announced on 19 February 2026, for misreporting capital requirements between 2019 and 2024. In that case, the ECB found the bank had misclassified corporate exposures and applied a lower credit risk weight to them than banking rules prescribe over 15 consecutive quarters, and had unduly excluded certain transactions when calculating risk-weighted assets for credit valuation adjustment risk over 21 consecutive quarters.
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