Presentation of the SSM guide to the method of setting administrative pecuniary penalties

Abstract

Article 18 of the SSM Regulation and Article 132 of the SSM Framework Regulation set out the basis for the ECB’s administrative pecuniary penalties’ regime. Under Article 18(1) and (7) of SSM Regulation, the ECB (via its decision making body, Governing Council) may, impose administrative pecuniary penalties on supervised entities, in case of an intentional or negligent breach of (i) a requirement established by directly-applicable acts of Union law where administrative pecuniary penalties are available to competent authorities or (ii) a requirement provided for in ECB regulations and decisions. Within the exercise of its power to impose such penalties, the ECB enjoys a wide margin of discretion within the limits set by SSM Regulation and Regulation (EC) No. 2532/98. In this respect, the penalties applied must meet the criteria set out in Article 18(3) of SSM Regulation: they must be therefore “effective, proportionate and dissuasive”. Furthermore, the ECB may not exceed the limits specified in Article 18(1) of SSM Regulation and Article 4a (1) (a) of Regulation (EC) No 2532/98. The ECB may impose penalties of up to 10% of a bank’s total annual turnover in the preceding business year, or twice the amount of profits gained or losses avoided as a result of the breach, where those can be determined, as set in Article 18 of the SSM Regulation.