The European Central Bank (ECB) reported that it has imposed a monetary fine on the European subsidiary of the American bank Goldman Sachs for incorrect risk labeling, determining that it has ‘severely’ violated regulations.
Goldman Sachs Bank Europe incorrectly classified its exposure to companies for eight consecutive quarters, from 2019 to 2021, assigning them a lower risk level than regulations stipulate, the ECB found on Monday.
– The bank provided the ECB with incorrectly calculated figures, thereby preventing the ECB from gaining a comprehensive insight into the risk profile – the ECB emphasized, adding that Goldman Sachs ‘did not timely disclose the error due to inadequate internal controls’.
Risk determines how much capital a bank must reserve for potential losses.
Goldman Sachs Europe assigned a lower risk level to certain assets, thereby reporting higher capital ratios than regulations stipulate, the ECB stated.
The bank has ‘severely’ violated regulations, concluded the central monetary institution of the eurozone, imposing a monetary fine of €6.63 million. The ECB assesses regulatory violations on a scale from mild to extremely severe.
Goldman Sachs highlighted in a statement that it has closely cooperated with the ECB and taken all necessary steps to resolve the issue.
A spokesperson for Goldman Sachs stated that they recognize the critical importance of regulatory reporting obligations, claiming that they have fully corrected what they describe as a ‘legacy issue’.
The bank can still contest the ECB’s decision before the Court of Justice of the European Union.
