ECB Fines Confédération Nationale du Crédit Mutuel €3.54 Million for Capital Requirements Breaches

The European Central Bank decided on 9 February 2024 to impose two administrative penalties on Confédération Nationale du Crédit Mutuel for separate breaches of capital requirements, bringing the total sum of the sanctions against the French cooperative banking group to €3,540,000. The ECB published the decisions on 21 March 2024 in line with standard SSM enforcement practice.

The larger of the two penalties amounts to €3,130,000 and relates to one capital requirements breach, while a second fine of €410,000 addresses a distinct but related infringement. According to the ECB, between May 2021 and April 2022 the bank failed to apply floors that two ECB decisions required for certain credit risk exposures calculated with internal models, so it reported a higher capital ratio than warranted; one breach was classified as moderately severe and the other as minor. Both were decided on the same date.

NATURE OF THE CAPITAL BREACHES

Capital requirements under the Single Supervisory Mechanism derive from EU prudential legislation, principally the Capital Requirements Regulation and the Capital Requirements Directive, which set binding rules on the quantity and quality of capital that banks must hold against their risk exposures.

The ECB classified the breaches within its established severity framework before arriving at the penalty amounts, a process that took into account the degree of the bank's misconduct, the impact of the breaches and the size of the entity. The two penalties concerned two different ECB internal-model decisions (of 20 May 2021 and 31 May 2021).

Confédération Nationale du Crédit Mutuel is the central body of the Crédit Mutuel group, a French cooperative banking network. It is a significant institution under direct ECB supervision.

PUBLICATION AND SUBSEQUENT CHANGES

The ECB publishes details of supervisory sanctions in its SSM sanctions register.

The ECB noted that since April 2022 the bank has used the foundation internal ratings-based approach for these exposures and is therefore no longer required to apply the floors.