ECB slaps small fines on two banks in Cyprus, Luxembourg

FRANKFURT (Reuters) - The European Central Bank has fined the Bank of Cyprus and Luxembourg's Banque et Caisse d’Epargne de l’Etat for breaking rules relating to risk and liquidity, respectively, the ECB said on Friday.

State-owned Banque et Caisse d’Epargne de l’Etat was fined 3.755 million euros for miscalculating its exposure to other banks.

The ECB said this "severe breach" caused by "significant deficiencies" resulted in the bank reporting a better capital position than it really had for seven straight quarters.

Bank of Cyprus transferred liquidity to some subsidiaries without seeking the ECB's approval, preventing the supervisor "from obtaining a comprehensive picture of its prudential situation."

"The degree of the entity’s misconduct was assessed as 'high' taking into account, in particular, that the entity committed the breach intentionally," the ECB said.

However, the Cypriot bank was fined just 575,000 euros, also due to the low impact of the breach on its prudential situation.

(Reporting By Francesco Canepa; Editing by Hugh Lawson)