Goldman Sachs Group Inc.’s continental European unit was fined €6.63 million ($7.2 million) by the European Central Bank after it failed to properly calculate its capital ratio.
(Bloomberg) — Goldman Sachs Group Inc.’s continental European unit was fined €6.63 million ($7.2 million) by the European Central Bank after it failed to properly calculate its capital ratio.
For eight consecutive quarters from 2019 to 2021, Goldman Sachs Bank Europe misclassified corporate exposures and applied a lower risk-weight to them than what banking rules prescribe, the ECB said in a statement on Monday in Frankfurt.
Goldman Sachs and its rivals have rapidly expanded units in the European Union to retain access to the bloc’s clients after Brexit severed many ties with their London operations. The ECB is seeking to ensure banks have a handle on their risks following that unprecedented influx of sophisticated banking institutions.
“We recognize the critical importance of our regulatory reporting obligations and have taken all necessary steps to fully remediate this legacy issue,” a Goldman Sachs spokesman said in an emailed response to Bloomberg. “We have closely cooperated with the ECB throughout and are pleased to have resolved matters fully.”
Company filings show that the bank’s European unit vastly exceeded its capital requirements in recent years, suggesting the deficiencies wouldn’t have caused it to fall below the minimum level set by the ECB.
The ECB also said that issues with the bank’s internal controls prevented it “from detecting this mistake in a timely manner.”
(Corrects headline to remove reference to risk models.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.