ECB Fines J.P. Morgan €12.18 Million After Years of Capital Misreporting

Key Takeaways

• Years of Misreporting: J.P. Morgan understated risk-weighted assets between 2019 and 2024 by misclassifying corporate exposures and excluding certain transactions from credit valuation adjustment calculations.
• Capital Ratios Overstated: Because risk-weighted assets were underreported, the bank’s capital ratios appeared higher than they should have been, affecting supervisory transparency.
• Control Failures Cited: The ECB found the breaches were committed with serious negligence and pointed to deficiencies in internal processes and controls that failed to detect the issues in a timely manner.
• Penalty Totals €12.18 Million: The ECB imposed two administrative penalties, classifying the credit risk breach as “severe” and the credit valuation adjustment breach as “moderately severe.”

Deep Dive

The European Central Bank has fined J.P. Morgan €12.18 million after concluding the bank misreported key risk figures used to calculate its capital requirements over several years.

In a decision published 19 February 2026, the ECB said the Frankfurt-based subsidiary reported incorrectly calculated risk-weighted assets between 2019 and 2024. Those figures form the backbone of a bank’s capital calculations and are central to how supervisors assess financial resilience.

According to the ECB, the issues were not isolated. For 15 consecutive quarters, the bank misclassified corporate exposures and applied a lower risk weight for credit risk than required under banking rules. Over an even longer stretch (21 consecutive quarters) it excluded certain transactions when calculating risk-weighted assets for credit valuation adjustment risk, which reflects the risk that a counterparty to a derivative contract could default.

Taken together, those errors meant the bank reported lower risk-weighted assets than it should have. Because capital ratios are calculated using those assets as a denominator, the bank’s reported capital ratios were higher than they should have been.

The ECB said both breaches were committed with serious negligence and were driven by evident deficiencies in the bank’s internal processes. Internal controls did not detect the problems in a timely manner.

Risk-weighted assets are more than a technical metric. They are the basis on which banks calculate how much capital they must hold to absorb potential losses. Supervisors rely on those figures to form a comprehensive view of a bank’s risk profile.

By submitting wrongly calculated data, the bank prevented the ECB from having that full picture during the affected periods, the central bank said.

When setting the penalty, the ECB applied its Guide to the method of setting administrative pecuniary penalties. It classified the credit risk breach as “severe” and the credit valuation adjustment risk breach as “moderately severe,” two of the five available categories ranging from minor to extremely severe.

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