“In 2017 and 2018, for seven consecutive quarters, Banque et Caisse d’Epargne de l’Etat, Luxembourg reported lower risk-weighted assets than it should have done for exposures to other banks,” the ECB said in a statement on Friday. “Due to significant deficiencies in its internal control framework on internal models, during that period the bank was unable to detect an inaccurate calibration of the probability of default model for exposures to other banks.”

The ECB considered this miscalculation, which reflects the state-owned bank’s ability to cope with losses, to be severe breach and fined it €3.755m.

“The regulatory CET1 ratio reported by the Bank as of 31 December 2017 was 18.3% instead of 17.5% and the one reported as of 31 December 2018 was 22.4% instead of 21.6%. This error was unfortunately not detected by the internal control system in place at the time within Spuerkeess,” the bank said in a statement.

“It should be noted that the bank’s CET 1 ratios have always remained at levels well above the regulatory minimum of 8.5% (Total SREP Capital Ratio) set by the European Central Bank for Spuerkeess in 2017 and 2018,” it said.

“The error was rectified immediately after its detection by the bank’s teams in early 2019 and the banking supervisor was duly informed. Spuerkeess’ internal control system was immediately adapted and strengthened to prevent such an error from happening again in the future.”

The bank will not appeal the fine.

In five years, the ECB has imposed around 15 administrative fines, of which only one other one concerns a Luxembourg entity--Natixis Wealth Management--which was fined €1.85m in 2019 for breaches of large exposure requirements.

This story was first published in French on . It has been translated and edited by Delano.