- The European Central Bank (ECB) imposed three penalties for a total amount of €1.24 million ($1.41mn) for breaching requirements related to internal-rating-based models.
- SEB Baltics did not ensure sufficiently conservative estimation of its credit risk parameters.
The European Central Bank (ECB) has imposed separate administrative penalties, for a total amount of €1.24 million, on AS SEB Pank, AS “SEB banka” and AB SEB bankas (together referred to as SEB Baltics) for not complying with the imposed requirements related to the margin of conservatism for some of their internal models. The three entities were fined, respectively, €410,000, €340,000 and €490,000.
Between July 2022 and September 2024, i.e., for 26 months, the three entities failed to take adequate measures to meet the requirements set by the ECB to develop a framework to calculate an adequate margin of conservatism on the risk parameters determined by some of their internal-rating-based models, used for a considerable portion of their risk weighted assets.
The three entities failed to comply with clear requirements despite the additional time granted by the ECB for remediating the identified deficiencies. When setting a pecuniary penalty, the ECB applies its dedicated public guide. In this case, the ECB has classified the breaches as “moderately severe”.