ECB fines Germany's Helaba for misrepresenting risk

FRANKFURT (Reuters) - The European Central Bank said on Friday that it had fined German state-owned bank Helaba for "consciously" misrepresenting its exposure to turbulent financial markets during the COVID-19 pandemic so it would need less capital.

The 6.83 million euro ($7.29 million) fine, while small for a bank that reported net profit of more than 200 million euros in 2021, is the second-largest levied by the ECB since taking over supervision of the euro zone's biggest lenders in 2014.

The fine highlights the ECB's increased scrutiny of the models that banks use for calculating risk, which has also had repercussions for Italy's Intesa Sanpaolo and Germany's Deutsche Bank.

"When using its internal models to determine its risk-weighted assets for market risk (in 2020), the bank consciously decided to disregard the increased volatility," the ECB said.

"The bank knowingly reported wrongly calculated figures to the ECB, therefore preventing the ECB from having a comprehensive view of its risk profile."

Helaba said in a statement that it did not intend to breach its prudential obligations, but conceded that its "original assumption" was incorrect. It added that it had already taken steps to improve its models.

($1 = 0.9373 euros)

(Reporting By Francesco Canepa; Editing by Sharon Singleton)