Helaba Gets Fined By The ECB For Misrepresenting Risk

The European Central Bank announced on Friday that it has punished the German state-owned bank Helaba for "deliberately" exaggerating its exposure to volatile financial markets during the COVID-19 pandemic in order to reduce its capital requirements.

The 6.83 million euro ($7.29 million) punishment, while minor for a bank that declared a net profit of more than 200 million euros in 2021, is the second-highest imposed by the ECB since 2014, when it took over regulation of the major banks in the euro zone.

The fine illustrates the ECB's heightened scrutiny of the risk-calculation methods used by banks, which has also had ramifications for Intesa Sanpaolo and Deutsche Bank.

"When using its own models to estimate its risk-weighted assets for market risk (in 2020), the bank decided to ignore the higher volatility," the ECB explained.

"The bank willfully disclosed incorrectly calculated numbers to the ECB, preventing the ECB from gaining a complete understanding of its risk profile."

Helaba stated in a statement that it had no intention of violating its prudential requirements, but that its "initial premise" was erroneous. It stated that improvements to its models had already been made.