ECB hits France’s Credit Agricole with nearly €5m in fines

The sum marks the second-biggest penalty in the banking watchdog’s history

Photo: EPA

The European Central Bank announced it has slapped three fines totalling almost €5m on French lender Credit Agricole and several subsidiaries for breaching the rules on the way banks are supposed to classify certain capital reserves. The fine marks the second-biggest penalty in the banking watchdog, the Single Supervision Mechanism’s history, after last year it fined Italy’s Banco Popolare di Vicenza €11.2m.

According to the information Credit Agricole itself was fined €4.3m, its consumer finance unit CA Consumer Finance - €200,000 and Credit Agricole Corporate and Investment Bank  - its corporate and investment banking arm -  was sanctioned €300,000.

As ECB stated, the penalties relate to the manner in which CA classified some of its assets under the “CET1” (top quality) heading in public statements during 2015 and 2016. As Europost clarifies that the laws obligate banks to hold a certain amount of such top quality capital in relation to their exposure to market turmoil, as a buffer to absorb potential financial pressure or losses.

“The penalty has been imposed in respect of the bank classifying capital instruments as CET1 instruments during three consecutive quarterly reporting periods and two consecutive public disclosures in 2015 and 2016 without having obtained the prior permission of the competent authority,” the ECB said. 

CA, however, announced that it will challenge ECB’s ruling at the Luxembourg-based European Court of Justice.

 “Credit Agricole has taken note of the complaints… and reserves the option of appealing,” the group said on Monday.

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