The European Central Bank imposed administrative penalties totalling €1.24 million on the three Baltic subsidiaries of Swedish banking group SEB, following a finding that the institutions had failed to maintain adequate margins of conservatism in some of their internal ratings-based credit risk models. The ECB's decision was dated 27 March 2025 and announced publicly on 18 April 2025, with separate penalties applied to each of the three entities in Estonia, Latvia, and Lithuania.
AS SEB Pank, the Estonian subsidiary, received a penalty of €410,000. AS SEB banka in Latvia was fined €340,000, while AB SEB bankas in Lithuania received the largest individual penalty of €490,000. The three sanctions reflect the ECB's assessment that each entity had independently failed to meet the supervisory requirements for the internal models they use to calculate risk-weighted assets for credit risk.
BREACHES RAN FROM 2022 TO 2024
The ECB classified the severity of the violations at level 2 on its five-grade scale. The supervisory authority found that the margins of conservatism embedded in some of the SEB Baltic subsidiaries' IRB models did not meet the requirements set out under the applicable framework.
The breaches ran from 2 July 2022 until at least 6 September 2024, a period during which the entities were exposed to a potential underestimation of their credit risks. The ECB treated as a mitigating circumstance the fact that the banks took remedial measures during part of that period to mitigate the underestimation of risks. SEB's Lithuanian unit later said corrective actions had already been taken.
RIGHT OF APPEAL
The ECB's decisions can be challenged before the Court of Justice of the European Union.
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