Luxembourg-based Banque Internationale à Luxembourg (BIL) has been fined €3.255 million by the European Central Bank (ECB) after overstating its capital for three consecutive quarters.
The ECB announced on Monday evening that BIL had intentionally failed to apply its approved internal models when calculating expected losses on defaulted retail and corporate exposures.
The breach lasted for one year and affected the bank’s figures from the fourth quarter of 2023 to the second quarter of 2024.
Capital ratios are key indicators of a bank’s financial strength and its ability to absorb potential losses.
The ECB classified the breach as “severe” and imposed an administrative penalty of €3.255 million.
Meanwhile, BIL’s majority shareholder, Chinese investment company Legend Holdings, is seeking a buyer for its 90% stake in the bank. The remaining 10% is held by the Luxembourg state.
BIL has the right to challenge the ECB’s decision before the Court of Justice of the European Union.
