The European Central Bank (ECB) imposed an administrative fine of 575,000 euros on Bank of Cyprus for transferring liquidity to its subsidiaries without seeking prior approval from the supervisory authority.
In 2016, in view of the bank’s liquidity situation at that time, the ECB confirmed that Bank of Cyprus had to seek prior approval for any transfer of capital or liquidity to any of its subsidiaries. The national supervisory authority had initially imposed this precaution in 2012 before the introduction of European banking supervision.
However, from September 2016 to December 2017, the bank deliberately made numerous transfers without seeking the approval of the supervisory authority. This happened despite the obvious knowledge of this requirement and after the bank had correctly requested the approval of the ECB in many other cases during the same period, thus accepting that it would lead to a breach. This prevented the ECB from properly assessing the bank ‘s prudential position during this period and is therefore characterized as a highly misconduct.
When deciding on the amount of the penalty to be imposed on a bank, the ECB applies the guideline on the method of imposing administrative fines. In this case, the ECB described the infringement as moderately serious. More details on sanctions are available on the ECB’s Banking Supervision website.
The bank has the right to challenge the decision of the ECB before the Court of Justice of the European Union.
Source: Capital
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