ECB Enforcement Activities in 2022
On 30 May 2023, the European Central Bank (“ECB”) published an annual report (here) as regards sanctioning activities carried out in 2022 by competent authorities participating in the Single Supervisory Mechanism (“SSM”). The report provides detail on the formal sanctioning proceedings conducted in 2022, as well as on administrative penalties imposed on supervised entities for breaches of prudential requirements.
Main Findings
Along with proceedings ongoing at the beginning of the year, competent authorities in the SSM conducted a total of 504 formal sanctioning proceedings in 2022. 319 of these were finalised in the year, 265 of which resulted in a penalty.
Corresponding with SSM supervisory priorities (here), a significant number of proceedings in 2022 related to breaches of prudential requirements in the area of internal governance (40%). This was followed by breaches concerning supervisory reporting requirements (22%). Additionally, there were rises in the number of proceedings and penalties imposed in relation to large exposures (11%), qualifying holdings (9%), own funds (5%), and public disclosures (3%).
Sanctioning activities in 2022 primarily concerned less significant institutions (“LSIs”), which accounted for 60% of all proceedings and 59% of all administrative penalties imposed. This was followed by natural persons, which accounted for 25% of all proceedings conducted and 22% of administrative penalties imposed.
Of the 319 formal sanctioning proceedings completed in 2022, 265 resulted in the imposition of a total of 155 administrative penalties (99 pecuniary and 56 nonpecuniary). Overall, penalties imposed by competent authorities in the SSM in 2022 totalled approximately €17.23 million. The highest pecuniary penalty imposed concerned an LSI and amounted to over €4 million.
Of the 319 proceedings completed in 2022, 54 were finalised without the imposition of a penalty. However, a considerable number of these cases (43%) resulted in a formal confirmation of wrongdoer's liability.
Comment and Next Steps
Financial institutions should take note that the ECB’s report underscores the vigilance with which competent authorities in the SSM will police prudential requirements. In addition, it should be noted that, according to the report, governance is expected to remain a focus of SSM sanctioning activity for 2023 and beyond, in line with supervisory priorities.
Also contributed by David O’Keeffe Ioiart
This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.
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