25 April 2014

Bloomberg: ECB proposes aligning upper limit for penalties imposed on banks

The ECB says the upper limit for fines that has been in place since the central bank was created in 1998 should match that applicable to the lenders it will start supervising in November. The proposed changes to European law were posted on the ECB’s website.

Under current rules, the ECB can fine lenders a maximum of €500,000, or €10,000 a day for as much as six months, for infringements of regulations such as minimum reserve requirements. Under the rules governing the SSM, the ECB will be able to impose a penalty of 10 per cent of the annual turnover of the financial institution or as much as twice the profit made or loss avoided from a breach of European Union law.

"This difference is not considered justifiable since an infringement of an ECB regulation is not necessarily less serious than a breach of directly applicable Union law", the ECB said. "All administrative penalties imposed by the ECB on the credit institutions it supervises within the SSM should be subject to the same upper limits."

The ECB will be responsible for the supervision of about 130 of the euro area’s biggest banks from November. National regulators will monitor smaller financial institutions and will remain responsible for issuing penalties under domestic law.

As Europe’s top supervisor, the ECB’s powers to impose sanctions will be greatly expanded. It will be able to penalise banks for infringements including failing to meet capital requirements, to disclose information or to fulfill their duties in granting loans.

Full article

ECB documents

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