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On 10 November 2025, the European Central Bank (ECB) announced the imposition of periodic penalty payments, amounting to €187,650, on ABANCA Corporación Bancaria, S.A. (ABANCA), a credit institution headquartered in Spain.
The penalty was imposed for ABANCA’s failure to comply with a requirement in a specific ECB decision addressed to ABANCA on 1 December 2023. The ECB decision had required ABANCA to conduct a materiality assessment of its climate-related and environmental (C&E) risks by a specific date. Under the materiality assessment, ABANCA was required to reinforce its identification of the material C&E risks to which it is, or might be, exposed. ABANCA failed to comply with the requirement to conduct properly the materiality assessment as specifically required in the ECB decision for 65 days.
When deciding on the level of periodic penalty payments, the ECB considered the following factors in particular:
the materiality of the breach, as it prevented ABANCA from having an appropriate basis for identifying whether it was, or might be, exposed to material C&E risks in the short, medium and long-term
the duration of the breach
the average daily turnover of ABANCA at the consolidated level.
The periodic penalty payments imposed on ABANCA follows a continued focus by the ECB on C&E risks within the banking sector. The ECB has taken several steps to ensure credit institutions properly identify, assess and manage C&E risks, including:
In 2020, the ECB set supervisory expectations with the publication of the ECB’s guide on climate-related and environmental risks. This set out expectations regarding the management and disclosure of C&E risks.
In 2022, the ECB took further steps in conducting a stress test on climate-related risks and a thematic review of C&E risks.
Following shortcomings identified by the ECB in 2022, the ECB set staggered deadlines for credit institutions to meet all the supervisory expectations in its guide on climate-related and environmental risks.
The ECB’s power to impose enforcement measures such as periodic penalty payments is provided for in Article 18(7) of Council Regulation (EU) No 1024/2013 (otherwise referred to as the ‘SSM Regulation’). This is different to the ECB’s power to impose pecuniary penalties on credit institutions (more similar to administrative sanctions for regulatory breaches). Unlike sanctions, periodic penalty payments are not intended to punish misconduct, instead their goal is to ensure timely compliance on an ongoing basis. Periodic penalty payments are imposed in relation to on-going breaches and therefore are calculated on a daily basis. As regards periodic penalty payments, the ECB may require a credit institution to pay a penalty of up to 5% of its average daily turnover for every day the breach continues, up to a maximum period of six months (after which further action may be taken by the ECB if it chooses).
The ECB’s decision to impose periodic penalty payments on ABANCA underscores its continued emphasis on C&E risk management within the banking sector. It also serves as a reminder that credit institutions should ensure compliance with supervisory expectations in addition to their legal obligations under EU and domestic legislation and should take care, in particular, in ensuring compliance with any specific ECB decisions requiring them as an individual credit institution to take certain compliance steps.
Credit institutions should not, for example, assume that recent no action letters in respect of Pillar 3 disclosure requirements will result in regulators taking a relaxed approach in respect of other ESG compliance areas. With supervisory scrutiny increasing, proactive engagement and robust governance around C&E risk assessments will be essential to avoid similar penalties.
For further information on this topic, please contact Dario Dagostino, Partner, Patrick Brandt, Partner, Mark Devane, Partner, Chloe Culleton, Partner, Sarah Lee, Senior Practice Development Lawyer or your usual contact.
