Judgment;Abstract — ECLI:EU:T:2022:781
Date: 2022-12-07
Language of the case: English
Court formation: Fourth Chamber, Extended Composition
Subject matter: European Central Bank (ECB);Economic and monetary policy
Procedure: Action for annulment - unfounded
Origin: Latvia

summary but sufficiently clear manner, in accordance with Article 143(2)(a) of Regulation No 468/2014, both the subject matter of the inspection, namely credit risk, and its purpose, namely the ECB’s analysis of that risk. In that regard, the ECB was not under an obligation to mention in that letter that there was a suspicion of infringement, which, moreover, the applicant does not assert (see paragraphs 188 and 226 below). 147 The concept of credit risk is a fundamental concept of banking activity, which is unambiguous and is, in essence, the risk that a borrower will not repay their credit. It is referred to in Article 1 of Regulation No 575/2013, in Article 79 of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ 2013 L 176, p. 338), and is subject, moreover, to Principle 17 of the Core Principles for Effective Banking Supervision drawn up by the Basel Committee on Banking Supervision and published in September 2012 (‘the Core Principles for Effective Banking Supervision’), which are not mandatory, but constitute, in their own words, ‘the de facto minimum standard for sound prudential regulation and supervision of banks and banking systems’. 148 It should also be noted that, during the meeting held on 5 March 2019, that is to say, several days before the start of the inspection, the head of the inspection mission provided clarifications on the inspection at issue, using a document handed over to the applicant. In particular, it specified the scope of the mission, entitled ‘Credit risk and governance’, detailing the content of the inspection as regards classification and provisioning, inventory tape (foreclosed assets sold), collateral valuation and funds (assets held for sale), data quality, governance and business model (see page 2 of that document). 149 The contested decision was also adopted in circumstances known to the applicant. The latter was in regular contact with the FCMC, which, for several years, had been closely following the credit risks to which the applicant was exposed, and the FCMC had adopted, in respect of the applicant, as indicated in paragraphs 9 and 12 above, prudential supervision decisions relating, inter alia, to those risks in 2016 and 2017. The applicant was in direct contact with the ECB, given that it had written to the ECB on 5 July and 12 September 2018 requesting it to intervene in its prudential supervision and given that the President of the Supervisory Board of the ECB had replied to the applicant, by letter of 8 October 2018, stating that she shared the FCMC’s opinion that the applicant’s situation required specific prudential supervision. The applicant was aware of all aspects of the arbitration proceedings, which it had itself brought. Lastly, it was informed of the procedure for the ECB to take over its direct prudential supervision, since the draft decision relating to that had been communicated to the applicant by the ECB’s letter of 11 February 2019. 150 Consequently, even though the applicant did not have, on the date its action was brought, the draft decision deemed adopted by the Governing Council, which was confidential under Article 10.4 of Protocol No 4 on the Statute of the European System of Central Banks and of the ECB (see, to that effect, judgment of 19 December 2019, ECB v Espírito Santo Financial (Portugal), C‑442/18 P, EU:C:2019:1117, paragraphs 43 to 46), it was sufficiently familiar with the grounds of the contested decision for the purposes of assessing its merits. 151 In addition, it should be noted that the applicant received a non-confidential version of the draft decision deemed adopted by the Governing Council following a measure of organisation of procedure adopted by the Court. That draft, the main grounds of which have been set out in paragraphs 23 to 27 above, sets out the recent history of supervision of the applicant and states that deficiencies and infringements of the applicable provisions, which it sets out in detail, were identified over the previous years and were not the subject of appropriate measures on the part of the applicant. It states that the ICSID recommendation prevents the FCMC from implementing all supervisory measures with regard to the applicant, that the ECB is preparing to take over direct prudential supervision of the applicant and that an on-site inspection will enable the ECB to conduct its own analysis of the applicant’s situation. It adds that, in conjunction with the planned taking-over of direct supervision of the applicant, the ECB will then be in a position to take the supervisory measures necessary to ensure that the applicant complies with prudential requirements. 152 Thus, that communication enabled the applicant to obtain details of the grounds of the contested decision, on which it was given an opportunity to submit observations at the stage of the reply. 153 Consequently, the seventh plea in law must be rejected as unfounded. 3. The fifth plea in law, alleging infringement of the applicant’s right to be heard 154 The applicant submits that the ECB infringed its right to be heard by not giving it an opportunity to comment on the planned on-site inspection before adopting the contested decision. 155 The ECB, supported by the Commission, disputes that argument. 156 As a preliminary point, the Court notes that, in support of the plea alleging infringement of the right to be heard, the applicant merely states briefly that it was not given an opportunity to comment on the planned on-site inspection before the contested decision was adopted. 157 Under Article 41(2) of the Charter, the right to good administration includes, inter alia, the right of every person to be heard, before any individual measure which would affect him or her adversely is taken. 158 In the present case, no provision of Regulation No 1024/2013 or of Regulation No 468/2014 provides that a decision as regards the inspection of a credit institution is to be preceded by the possibility for that institution to be heard. However, that fact is not, by itself, such as to relieve the ECB of its obligation to hear the entity to which an inspection decision is addressed prior to the adoption of that decision. The right to be heard, which is a fundamental right guaranteed by the Charter, is binding on the ECB without another text expressly providing for it. 159 However, in the first place, although Article 22 of Regulation No 1024/2013, entitled ‘Due process for adopting supervisory decisions’, provides, in paragraph 1, that the ECB is to give the persons who are the subject of supervisory decisions the opportunity of being heard in accordance with Article 4 and Section 2 of Chapter III, entitled ‘Specific supervisory powers’, Article 22 does not cover measures adopted in accordance with the provisions of Section 1 of that chapter, entitled ‘Investigatory powers’. 160 Moreover, Article 145 of Regulation No 468/2014, entitled ‘Procedure and notification of an on-site inspection’, provides, in the first sentence of paragraph 1, that the ECB is to notify the legal person subject to an on-site inspection of the ECB decision and of the identity of the members of the on-site inspection team, at least five working days before the start of that inspection, but does not state that the person concerned has the right to be heard. 161 Above all, Article 31 of Regulation No 468/2014, entitled ‘Right to be heard’, expressly provides, in the last sentence of paragraph 1 of that article, that Section 1 of Chapter III of Regulation No 1024/2013 is not subject to the provisions of that article. 162 Accordingly, the applicable legislation provides that legal persons who are subject to one of the investigatory measures referred to in Section 1 of Chapter III of Regulation No 1024/2013, including an on-site inspection, are not entitled to be heard prior to the adoption of that measure. 163 By providing that the persons concerned are not to be heard before the adoption of an investigatory measure, the applicable legislation is consistent with the nature of such a measure, the sole purpose of which is to gather information (see, to that effect and by analogy, judgment of 26 June 1980, National Panasonic v Commission, 136/79, EU:C:1980:169, paragraph 21, and Opinion of Advocate General Wahl in Italmobiliare v Commission, C‑268/14 P, not published, EU:C:2015:697, point 119). 164 Furthermore, it follows from Article 22(1) of Regulation No 1024/2013 that decisions by which the ECB decides, where appropriate, to impose prudential measures in the light of information gathered during an investigation must be the subject of a procedure including the right of the persons concerned to be heard. 165 It should also be noted that the fact that an inspection procedure is carried out over a number of months, includes on-the-spot checks and a hearing of the undertaking concerned, the declarations of which are placed on the file, may establish that the undertaking concerned was heard, with full knowledge of the facts, during the inspection (see, to that effect, judgment of 18 December 2008, Sopropé, C‑349/07, EU:C:2008:746, paragraphs 45 and 46). 166 The Court notes that, in the present case, according to the presentation made by the head of the inspection mission on 5 March 2019, several meetings were to be arranged between the members of the inspection team and the applicant’s executives on the relevant matters (see page 5 of that presentation). It is also apparent from that presentation that the sending of a draft inspection report and an ‘exit’ meeting were planned before the sending of a final report and the ‘closing’ meeting (see page 7 of that presentation). 167 It follows from the foregoing that a decision by the ECB to conduct an on-site inspection in a credit institution pursuant to Article 12 of Regulation No 1024/2013 is not subject to the right of the entity concerned to be heard before the adoption of that decision. 168 It is after the decision to conduct an on-site inspection and before any adoption of a decision pursuant to Article 4 and Section 2 of Chapter III of Regulation No 1024/2013 that the ECB is required to give the persons concerned the opportunity to be heard. 169 For the sake of completeness, even if the ECB were required to hear the applicant before adopting the contested decision, it should be noted that an infringement of the rights of the defence, in particular the right to be heard, results in the annulment of the decision taken at the end of the administrative procedure in question only if, had it not been for such an irregularity, the outcome of the procedure might have been different (see judgment of 4 April 2019, OZ v EIB, C‑558/17 P, EU:C:2019:289, paragraph 76 and the case-law cited). 170 In the present case, it is not apparent from the documents in the file that, if the applicant had been heard before the contested decision was adopted, the outcome of the procedure might have been different. In that regard, the Court notes that the applicant does not make that argument and that the contested decision was adopted in a context known to the applicant, as stated in paragraph 149 above. 171 The fifth plea in law must therefore be rejected. 4. The second plea in law, alleging infringement of Article 12(1) of Regulation No 1024/2013 in that the contested decision was not necessary within the meaning of that provision, and the fourth plea in law, alleging breach of the principle of proportionality 172 In the second plea in law, the applicant submits that, under Article 12 of Regulation No 1024/2013, an on-site inspection must be necessary. However, the on-site inspection to which it was subject was a retaliatory measure by which the ECB showed that it does not tolerate any criticism. In the letter of 14 February 2019, the ECB did not clearly define the scope and purpose of the on-site inspection. It did not explain how an on-site inspection was necessary in order to analyse the credit risk. That risk has, however, been closely monitored by the FCMC for many years. All of the applicant’s credit decisions were monitored by the FCMC and all credit decisions relating to a sum in excess of EUR 50 000 were subject to approval by the FCMC. For a long time, no change has been made to the applicant’s credit portfolio without the FCMC’s approval. 173 In the fourth plea in law, the applicant claims that the contested decision breaches the principle of proportionality. The ECB should have used the least intrusive means to achieve the objective pursued. The applicant was always prepared to provide the ECB and the FCMC with all necessary information. It has not been shown that an on-site inspection, in particular carried out by the ECB, could not have been avoided by means of other appropriate investigatory measures. The on-site inspections conducted by the ECB are more restrictive than those carried out by the national competent authorities, in particular because they are conducted by staff who do not speak the language of the country concerned. That is particularly true for Latvia, whose language is not widely spoken outside its borders. Moreover, the inspection timetable was abusive, given that, at the time of the inspection, the applicant carried out its annual audit with a third-party undertaking and the ECB refused to postpone the inspection by one month. The applicant was not able to complete its annual audit in good time and the FCMC imposed a fine on it for that reason. 174 The ECB, supported by the Commission, disputes those arguments. 175 In view of the links between the second and fourth pleas in law, it is appropriate to examine those two pleas together. 176 Under Article 12(1) of Regulation No 1024/2013, the ECB may conduct all necessary on-site inspections at the business premises of institutions subject to prudential supervision, including credit institutions established in the participating Member States. 177 The qualifier ‘necessary’ used in Article 12(1) of Regulation No 1024/2013 is consistent with the principle of proportionality, which requires that acts of the EU institutions be appropriate for attaining the legitimate objectives pursued by the legislation at issue and do not go beyond what is necessary in order to achieve those objectives; when there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued (judgments of 22 January 2013, Sky Österreich, C‑283/11, EU:C:2013:28, paragraph 50, and of 6 September 2017, Slovakia and Hungary v Council, C‑643/15 and C‑647/15, EU:C:2017:631, paragraph 206). 178 The assessment of the proportionality of a measure must be reconciled with compliance with the discretion that may have been conferred on the EU institutions at the time it was adopted (see judgment of 8 May 2019, Landeskreditbank Baden-Württemberg v ECB, C‑450/17 P, EU:C:2019:372, paragraph 53 and the case-law cited). The ECB has a broad discretion when it adopts, as in the present case, a measure relating to the prudential supervision of a credit institution (see, to that effect, judgment of 8 May 2019, Landeskreditbank Baden-Württemberg v ECB, C‑450/17 P, EU:C:2019:372, paragraph 86). 179 In accordance with the case-law cited in paragraph 177 above, the need for and proportionality of an on-site inspection must be assessed in the light of the objectives pursued by the legislation. 180 In that regard, it should be noted that the objective of prudential supervision of credit institutions is to ensure the safety and soundness of those institutions, the stability of the financial system and the protection of depositors (see recitals 30 and 65 of Regulation No 1024/2013). 181 Sound management of credit risk by credit institutions is one of the principal objectives of prudential supervision, as is apparent from Article 1 of Regulation No 575/2013, Article 79 of Directive 2013/36 and, moreover, from Principle 17 of the Core Principles for Effective Banking Supervision. 182 Furthermore, it should be noted that each credit institution is subject to ‘ongoing’ prudential supervision by the competent authorities (see recital 37 of Regulation No 1024/2013, recital 3 of Directive 2013/36 and recital 25 of Regulation No 575/2013). 183 The competent authorities have, in accordance with Articles 14 to 16 of Regulation No 1024/2013 and Article 104 of Directive 2013/36, powers enabling them to withdraw, from a credit institution, the authorisation necessary to carry on its business, to oppose the acquisition of a holding in that institution and to impose supervisory measures, in particular the strengthening of its governance, the improvement of its capital or liquidity situation, the restriction of economic activity, the divestment of activities or the removal of a member of a management body. 184 The competent authorities also have, in accordance with Articles 9 to 13 of Regulation No 1024/2013 and Article 65(3) of Directive 2013/36, investigatory powers enabling them to require all information necessary for them to carry out their tasks, including information to be provided at recurring intervals and in specified formats for supervisory and related statistical purposes, to conduct investigations and to carry out on-site inspections. Recital 47 of Regulation No 1024/2013 states that the ECB should be able to require all necessary information, and to conduct investigations and on-site inspections ‘in order to carry out its tasks effectively’. 185 The competent authorities are to carry out, in accordance with Articles 97 and 99 of Directive 2013/36, a supervisory review and evaluation. They are to establish the frequency and intensity of the review and evaluation, having regard to the size, systemic importance, nature, scale and complexity of the activities of the institution concerned and taking into account the principle of proportionality. The review and evaluation is to be updated at least on an annual basis for institutions covered by the supervisory examination programme. That programme, which includes a plan for on-site inspections, covers institutions for which the results of stress tests or the outcome of the supervisory review and evaluation indicate significant risks to their financial soundness or indicate breaches of relevant provisions, institutions that pose a systemic risk to the financial system and any other institution if the competent authorities deem it to be necessary. The competent authorities may, if appropriate in the light of Article 97, implement measures such as an increase in the number or frequency of on-site inspections of the institution or the permanent presence of the competent authority at the institution. 186 Principles 9 and 10 of the Core Principles for Effective Banking Supervision provide, moreover, that the supervisory authority is to deploy its resources in proportion to the risk profile and systemic importance of the bank. They state that that authority is to apply an appropriate mix of on-site and off-site checks. First, the supervisory authority is to analyse the prudential reports and statistical returns provided by the banks. Second, it verifies the reports provided by the banks, on demand and at regular intervals, independently, by carrying out on-site checks or by using external auditors. It is in regular contact with the board of directors, external administrators, and senior and middle management. It meets regularly with the senior management and board of directors. It may call on independent third parties but may not delegate its prudential responsibilities to third parties. 187 It follows from the recitals, provisions and principles referred to in paragraphs 182 to 186 above that credit institutions are subject to ‘ongoing’ prudential supervision, which is based on a combination of off-site checks, carried out on the basis of information regularly communicated to the competent authorities, and on the basis of on-site checks, enabling the information provided to be verified. Off-site checks cannot, in principle, replace on-site inspections, which, inter alia, enable the competent authority to verify independently the information declared by those institutions. 188 It should be pointed out that, unlike inspections carried out by the Commission on the basis of Article 20(4) of Regulation No 1/2003, the purpose of which is to detect infringements of Articles 101 and 102 TFEU, the purpose of the on-site inspections carried out by the ECB is to verify, in the context of ongoing supervision combining off-site and on-site checks, that credit institutions ensure sound management and coverage of their risks and that the information communicated is reliable, so that the implementation of those inspections is not subject to the existence of a suspicion of an infringement. Moreover, that is not disputed by the applicant. 189 The conclusion in paragraph 188 above is not contradicted by the wording of the second sentence of Article 13(2) of Regulation No 1024/2013, according to which, in its control of the proportionality of the coercive measures, the national judicial authority may ask the ECB for detailed explanations, in particular relating to the grounds the ECB has for suspecting that an infringement of the acts referred to in the first subparagraph of Article 4(3) of that regulation has taken place and the seriousness of the suspected infringement and the nature of the involvement of the person subject to the coercive measures. 190 The second sentence of Article 13(2) of Regulation No 1024/2013 concerns not the need for the on-site inspection, but the control of the proportionality of the planned coercive measures, in particular where it is found that a person opposes an inspection. 191 Lastly, it follows from the provisions, recitals and principles referred to in paragraphs 182 to 186 above that the frequency and intensity of on-site inspections are set taking into account the principle of proportionality. 192 In the present case, first, it is apparent from the contested decision that deficiencies and infringements of the applicable provisions were identified by the FCMC during the years preceding the inspection and that the applicant did not adopt appropriate measures to address the prudential concerns arising from those findings. 193 In that regard, it should be noted that, in support of the second and fourth pleas in law, the applicant does not put forward any argument to dispute the reality of the deficiencies and infringements of the applicable provisions referred to in the contested decision. In particular, it does not claim to have challenged, before the national courts, the FCMC’s decisions adopted in February 2016 and August 2017, and does not explain the outcome of any court proceedings. It does not dispute the finding in the contested decision that it did not adopt appropriate measures to address the relevant prudential concerns. 194 Secondly, the applicant’s argument that it was prepared to provide the ECB with any necessary information cannot succeed, since such a provision of information was not equivalent to the possibility for the ECB to verify on-site the integrity and reliability of the information transmitted and to have meetings on various subjects with the applicant’s representatives. 195 Thirdly, the fact that the credit risk to which the applicant was exposed was closely monitored by the FCMC for a number of years, meaning in particular that all the applicant’s decisions relating to an amount exceeding EUR 50 000 were subject to the FCMC’s approval, does not call into question the need for the on-site inspection. That monitoring supports the attention paid by the FCMC to the credit risk and does not contradict the ground of the contested decision according to which the applicant did not take appropriate measures to remedy the already identified shortcomings and infringements of the applicable provisions. 196 Fourthly, the applicant is not entitled to claim that the contested decision is a retaliatory measure against it. In that regard, the statements by a member of the Administrative Board of Review of the ECB, made at a conference on 21 November 2017, according to which, in the event of a formal procedure initiated by a credit institution against it, the competent authority could react by intensifying its supervision, do not constitute sufficient probative evidence that the contested decision is a retaliatory measure, given that those brief statements were made ‘personally’, do not necessarily imply retaliation and are not detailed. 197 Fifthly, the argument that, in the letter of 14 February 2019 of the Director-General, the ECB did not clearly set out the scope and purpose of the on-site inspection and did not explain how an inspection was necessary in order to analyse the credit risk must be rejected. The question of whether that letter of 14 February 2019 contains an adequate statement of reasons has already been examined in paragraphs 145 to 150 above and concerns, in any event, a notification formality, provided for in Article 145 of Regulation No 468/2014, which must be distinguished from the question of whether the contested decision is well founded, which is concerned with the substantive legality of the contested measure, in accordance with the case-law referred to in paragraph 143 above. 198 Sixthly, the applicant’s argument that the inspections conducted by the ECB are more onerous than those of the national competent authorities must be rejected as having no factual basis. 199 First, as the ECB submits, the inspections that it conducts and those carried out by the national competent authorities are based on the same standards. Moreover, that is not disputed by the applicant. Second, as the ECB also submits, the use of English by the inspection staff cannot be regarded in the present case as a significant constraint, given that the applicant’s representatives were not obliged to communicate in that language with the members of the inspection team, and given that the applicant also subsequently chose English as the only language of communication with the ECB. 200 Furthermore, the fact that the ECB’s inspections are more onerous than those of national competent authorities does not, in any event, establish that they are disproportionate. 201 Seventhly and lastly, it has not been shown that the timetable for the inspection was abusive. In that regard, the Court notes that the inspection began more than three weeks after receipt of the letter of 14 February 2019 and that it was preceded by a ‘kick-off’ meeting containing details of the sequence of the inspection, which enabled the applicant to take organisation measures before the start of the inspection. The fact that the applicant carried out the annual audit of its accounts during the inspection does not demonstrate that that timetable was abusive. On the one hand, to require the ECB to postpone an inspection solely on the ground that the credit institution has to carry out the annual audit of its accounts would risk undermining the objective of financial stability, when Article 6(5) of Regulation No 1024/2013 provides, on the contrary, that the ECB may ‘at any time’ exercise its power to carry out an on-site inspection. On the other, it has not been established that the inspection prevented the applicant from completing the annual audit of its accounts in good time. In that regard, it should be noted that, first, it is for credit institutions to take the necessary measures to comply with the statutory deadlines for the submission of their audited accounts, secondly, according to the FCMC’s decision of 14 May 2019 imposing a penalty on the applicant, the latter had already recorded delays in the submission of its accounts in 2017 and, thirdly, the applicant’s delay in submitting its audited annual accounts can also be explained, if necessary, by the lack of means used by the audit team. 202 In those circumstances, the ECB was fully entitled to take the view, in the exercise of its broad discretion, that an on-site inspection at the applicant’s premises was necessary within the meaning of Article 12(1) of Regulation No 1024/2013, in order to carry out an examination of the credit risk to which the applicant was exposed, and, more broadly, to ensure the soundness of that institution, the stability of the financial system and the protection of depositors. Moreover, it has not been established that the ECB could have used a less onerous measure than the on-site inspection which it carried out or that the problems caused by that inspection measure were disproportionate to the objective pursued. 203 It follows from the foregoing that the second and fourth pleas in law must be rejected as unfounded. 5. The third plea in law, alleging infringement of Article 12(1) of Regulation No 1024/2013 in that the ECB did not properly exercise its discretion, and the sixth plea in law, alleging infringement of the ECB’s obligation to examine and assess carefully and impartially all the relevant aspects of the individual case 204 In the third plea in law, the applicant claims that the ECB failed to take account of the discretionary nature of a decision to conduct an on-site inspection. It has not been demonstrated that the ECB exercised its discretion as to whether an on-site inspection was appropriate. The absence of any ‘relevant’ consideration is apparent from the very unusual nature of a decision by the ECB to conduct an on-site inspection at a less significant credit institution. 205 In the sixth plea in law, the applicant submits that the ECB failed to fulfil its obligation, in accordance with the case-law, to examine carefully and impartially all the ‘relevant’ aspects of the individual case. The ECB failed to take into consideration the extensive relevant information available to the FCMC concerning any credit risk. 206 The ECB, supported by the Commission, contends that the third and sixth pleas in law must be rejected. 207 As a preliminary point, it must be held that the third plea in law must be regarded as alleging an error of law, to the effect that the ECB did not exercise its discretion to decide whether an on-site inspection was appropriate, as required by Article 12(1) of Regulation No 1024/2013, which is apparent in particular from the fact that the Director-General’s letter of 14 February 2019 does not mention any ‘relevant’ circumstance. 208 By its sixth plea in law, the applicant again raises a plea alleging an error of law, in that the contested decision is vitiated by a failure to examine carefully and impartially the ‘relevant’ aspects of the present case. 209 It is appropriate to examine those two pleas simultaneously, given that they both seek to criticise the ECB for having erred in law by not examining or by not assessing the relevant elements of the present case. 210 In that regard, it should be noted that, where an applicant raises pleas alleging errors of law of that nature, it is for the applicant to adduce evidence to support the conclusion that there was such an error. 211 In support of those pleas, the applicant submits, in summary form, that the Director-General’s letter of 14 February 2019 is devoid of ‘any relevant considerations’. The applicant states that an on-site inspection by the ECB is unusual in a less significant credit institution and that the ECB failed to take into account the large amount of information available to the FCMC regarding the credit risk to which the applicant was exposed. 212 However, it is apparent from the draft decision deemed adopted by the Governing Council, in particular its annex, that the ECB took into account the information available to the FCMC concerning the credit risk to which the applicant was exposed. It is also apparent that the ECB took account of the fact that the applicant was a less significant credit institution, finding on two occasions that that did not prevent the on-site inspection from being carried out, as noted in paragraph 137 above. Lastly, it follows that the ECB duly assessed whether an on-site inspection was appropriate and concluded that it indeed was, taking into account, in particular, the deficiencies and infringements of the applicable provisions which had been identified in previous years and the fact that the applicant had not taken appropriate measures to remedy them. 213 It follows from the foregoing, as from the response to the second and fourth pleas in law, that the applicant is not entitled to claim that the ECB did not examine the relevant circumstances of its situation or did not assess whether an on-site inspection was necessary in the light of those circumstances. 214 The third and sixth pleas in law must therefore be rejected as unfounded. 6. The eighth plea in law, alleging breach of the principles of the protection of legitimate expectations and legal certainty 215 The applicant submits that the contested decision breaches the principles of the protection of legitimate expectations and legal certainty because its scope and purpose are not clear. Given that the Director-General’s letter of 14 February 2019 mentions only the credit risk, the applicant is not in a position to know the scope of the binding effect of the letter and to ascertain to what extent a failure to comply with a request by the inspection staff could be regarded as an obstruction. That letter even states that the scope of the inspection could be extended without any limit during that inspection. However, the Guide to Banking Supervision states that an on-site inspection must have a pre-defined scope. The questions raised by the inspection staff covered many areas of no relevance to the analysis of credit risk. Certain questions did not have a discernible prudential supervision objective, but belonged more to a thorough anti-money laundering investigation, an area in which the ECB is not the competent authority, even in relation to significant institutions. Moreover, even in the context of an anti-money laundering investigation, the request made to the applicant to provide information on all incoming and outgoing payments for all its customers over the previous two years would have been unreasonable. 216 The ECB, supported by the Commission, disputes those arguments. 217 The principle of legal certainty requires, inter alia, that rules of law be clear, precise and predictable in their effect, especially where they may have negative consequences for individuals and undertakings (see judgment of 30 April 2019, Italy v Council (Fishing quota for Mediterranean swordfish), C‑611/17, EU:C:2019:332, paragraph 111 and the case-law cited). 218 The right to rely on the principle of the protection of legitimate expectations, which is the corollary of the principle of legal certainty, extends to any individual in a situation where EU authorities have caused him or her to entertain legitimate expectations. In whatever form it is given, information which is precise, unconditional and consistent and comes from authorised and reliable sources constitutes assurances capable of giving rise to such expectations. However, a person may not plead infringement of the principle of the protection of legitimate expectations unless he or she has been given precise assurances by the administration (judgment of 30 April 2019, Italy v Council (Fishing quota for Mediterranean swordfish), C‑611/17, EU:C:2019:332, paragraph 112). 219 The contested decision states that the purpose of the inspection is an in-depth investigation into the risks, risk control and governance of the applicant, in order to assess, inter alia, its procedures, systems and the quality of its management, and that that inspection will focus primarily on the credit risk. 220 The fact that the letter from the Director-General of 14 February 2019 stated that the purpose of the on-site inspection was the credit risk does not breach the principles of legal certainty and the protection of legitimate expectations. 221 Credit risk is a fundamental concept of banking activity, as stated in paragraph 147 above, which is understood by those involved in that sector. Moreover, the scope of the inspection was explained in more detail at the meeting of 5 March 2019, several days before the inspection began. As stated in paragraph 33 above, the head of the inspection mission explained, using a document handed over to the applicant, the scope of the mission, entitled ‘Credit risk and governance’, namely classification and provisioning, inventory tape (foreclosed assets sold), collateral valuation and funds (assets held for sale), data quality, and governance and business model. 222 In those circumstances, the applicant is not entitled to claim that that letter of 14 February 2019, in so far as it referred to credit risk, was not clear and that, consequently, it could not ascertain to what extent a failure to comply with a request from the inspection staff could be regarded as an obstacle to the inspection. 223 Furthermore, the fact that the letter from the Director-General of 14 February 2019 stated that the scope of the inspection could be extended during the inspection and that, in that event, the applicant would be informed of the extension by the Head of Mission on behalf of the ECB does not breach the principles of legal certainty and the protection of legitimate expectations. 224 That letter of 14 February 2019 stated that the applicant would be informed in advance regarding such an extension of the scope of the inspection. It is therefore apparent from that letter that, if the applicant was not informed of an extension, the subject matter of the inspection would remain limited to credit risk. 225 As regards the applicant’s argument that paragraph 69 of the Guide to Banking Supervision states that on-site inspections must have a predefined scope, it must be held that that was indeed the case for the inspection at issue, since it was focused on a specific risk. 226 Moreover, according to paragraph 73 of the Guide to Banking Supervision, on-site inspections may be ‘full-scope’, that is to say, cover a broad spectrum of risks and activities in order to provide a holistic view of the credit institution, or ‘targeted’, that is to say, focus on a particular part of the credit institution’s business, or on a specific issue or risk, or ‘thematic’, that is to say, focus on one issue (for example, business area or types of transactions) across a group of peer credit institutions. It states that joint supervisory teams, which include ECB staff and national competent authorities, may request a thematic review of a particular risk control or of the governance process across institutions. It states that thematic reviews may also be triggered on the basis of macro-prudential and sectoral analyses that identify threats to financial stability on account of weakening economic sectors or the spread of risky practices across the banking sector. 227 The complaint based on the claim that, during the inspection, inspection staff requested the disclosure of information unrelated to the credit risk must be rejected as ineffective. 228 The conditions for the implementation of an inspection decision based on Article 12 of Regulation No 1024/2013 do not, as such, affect the lawfulness of that decision, given that they concern facts subsequent to that decision (see, to that effect, judgment of 28 January 2021, Qualcomm and Qualcomm Europe v Commission, C‑466/19 P, EU:C:2021:76, paragraph 82 and the case-law cited). The legality of such a decision cannot therefore depend on the manner in which the inspection staff implement the decision. 229 It should be noted that, where inspection staff request the disclosure of information going beyond the subject matter of the inspection, the entity concerned has the right to refuse to provide such information, unless the ECB, by using coercive measures, enforces the decision concerned. 230 If the ECB decides to adopt a decision imposing a sanction on a legal person for obstructing an inspection, pursuant to Article 18(7) of Regulation No 1024/2013, that decision may be the subject of an action before the General Court. In the context of such an action, the legal person concerned may claim, if it considers that it is entitled to do so, that the inspection staff requested the disclosure of information going beyond the subject matter of the inspection. 231 The entity concerned may also, without refusing a request to disclose information in the context of an inspection, raise objections to that disclosure and request the ECB not to use the information at issue on the ground that it does not fall within the scope of the subject matter of the inspection. A refusal by the ECB to accede to the legitimate requests of the legal person concerned is capable of rendering the ECB liable and, where appropriate, of vitiating the acts subsequently adopted by the ECB. 232 In any event, in support of its argument that the inspection staff requested the disclosure of information unrelated to the credit risk, the applicant refers, first of all, in a general manner, to Annex A.12, which contains requests for information sent in writing to the applicant by the inspection staff in March and April 2019. By merely stating that that annex, which is approximately 10 pages long, contains examples of questions unrelated to the credit risk, without identifying the relevant questions and without stating the reasons why those questions are irrelevant for the analysis of the credit risk, the applicant does not place the Court in a position to assess the merits of its argument (see, to that effect, judgment of 13 June 2013, Versalis v Commission, C‑511/11 P, EU:C:2013:386, paragraph 115). 233 Although the applicant goes on to submit specifically that the ECB requested it to provide information on the incoming and outgoing payments of the bank’s clients during the previous two years, which is indeed apparent from Annex A.12, it does not state that it raised an objection to that written request by the inspection staff. However, even if that request went beyond the scope of the inspection or if it was disproportionate in view of the amount of information requested, it does not demonstrate that the contested decision itself, which is unambiguous, infringes the principles of the protection of legitimate expectations and legal certainty. 234 The eighth plea in law must therefore be rejected. 7. The ninth plea in law, alleging breach of the principles of equal treatment and non-discrimination 235 The applicant submits that the contested decision infringes the principle of equal treatment. On-site inspections at less significant credit institutions are very rare and the ECB has not explained why it adopted that unusual measure in the present case. Account should also be taken of the fact that the ECB failed to answer the questions raised by the applicant in its letters of 5 July and 12 September 2018 concerning the problems of corruption and the hostile comments made publicly by Latvian officials. The ECB has not demonstrated that it conducted an investigation in that regard and has not acknowledged that A’s public threats were inappropriate. The judgment of 26 February 2019, Rimšēvičs and ECB v Latvia (C‑202/18 and C‑238/18, EU:C:2019:139), did not resolve the problem, given that the Court of Justice annulled the measures imposed by the Republic of Latvia against A because the Republic of Latvia had not submitted evidence of the acts of corruption in good time. The contested decision was therefore adopted even though solid evidence supported the complaints of corruption and illegal conduct and the ECB refused to investigate and rectify that situation. The applicant concludes from this that, in the absence of any justification, the unusual treatment to which it was subject must be interpreted as a discriminatory act, bearing in mind that, in the meantime, A was reinstated in his post as Governor of the Central Bank of Latvia. 236 The ECB disputes the applicant’s arguments. 237 The principle of equal treatment, as a general principle of EU law, requires comparable situations not to be treated differently and different situations not to be treated in the same way, unless such treatment is objectively justified (see judgment of 6 June 2019, P. M. and Others, C‑264/18, EU:C:2019:472, paragraph 28 and the case-law cited). 238 A breach of the principle of equal treatment as a result of different treatment presumes that the situations concerned are comparable, having regard to all the elements which characterise them (judgment of 16 December 2008, Arcelor Atlantique et Lorraine and Others, C‑127/07, EU:C:2008:728, paragraph 25). 239 In the first place, the applicant does not state which institutions were in a situation comparable to its own and were not treated in the same way. 240 In the second place, even if the applicant is complaining of discriminatory treatment in comparison with less significant credit institutions which were not the subject of an inspection conducted by the ECB itself, it should be noted that not only does the ECB have the power to conduct inspections in less significant credit institutions, but that it has in fact done so in institutions other than the applicant, as the ECB contends and as, moreover, the applicant acknowledges. 241 Although it is apparent from the documents in the file that the inspections conducted by the ECB itself in less significant credit institutions are indeed considerably less frequent than those carried out by the ECB in institutions considered to be significant, it must be held that the grounds of the contested decision, in particular the ground that the ICSID recommendation prevented the FCMC from implementing all supervisory measures in respect of the applicant, are such as to explain how the applicant’s situation was a particular one, and therefore not comparable to the situations of other less significant credit institutions not subject to an on-site inspection by the ECB and, therefore, why the ECB decided in the present case to carry out such an inspection itself. 242 If the applicant is complaining of discriminatory conduct in comparison with credit institutions the main shareholder of which, unlike the applicant, did not complain of acts of corruption, it must be held that it is apparent from the grounds of the contested decision that the latter is not based on the existence of such a complaint. 243 In addition, first, it should be noted that (i) the criminal investigation which gave rise to A being charged concerns not the applicant, but a third-party Latvian bank, and (ii) as regards the acts of corruption complained of by CR, the applicant states, without providing further details, that the investigation is ongoing. 244 Secondly, although the applicant considers that the ECB was under an obligation to conduct an investigation into the acts of corruption complained of by CR, the ECB is fully entitled to argue that it is not competent itself to conduct an investigation into such acts and that it cooperates in that regard with the national competent authorities. 245 Moreover, even if the ECB made an error by not conducting an investigation into the acts of corruption complained of by CR, or into the comments made by A in respect of the applicant, it has not been demonstrated that that error was such as to render unlawful the contested decision in which a conclusion is reached not on whether it is appropriate to conduct such an investigation, but on the appropriateness of carrying out an on-site inspection. 246 Thirdly, it should be noted that the contested decision appears to respond in part favourably to the applicant’s requests which are set out in its letters of 5 July and 12 September 2018 and referred to in paragraph 18 above, since the effect of that decision was that the ECB would intervene more closely in the prudential supervision of the applicant. 247 Consequently, since the contested decision is not contrary to the principle of equal treatment, the ninth plea in law must be rejected as unfounded. 8. The tenth plea in law, alleging infringement of Article 19 and recital 75 of Regulation No 1024/2013 and misuse of powers 248 The applicant submits that Article 19 and recital 75 of Regulation No 1024/2013 require the ECB to carry out the tasks entrusted to it irrespective of any undue political influence. ECB decisions must not be influenced by any non-prudential considerations. 249 The applicant states that the contested decision is a retaliatory measure adopted because it and its shareholders complained of illegal conduct by a member of the Governing Council of the ECB. That is apparent from the decision by which the ECB decided to take over the direct prudential supervision of the applicant, the sole reason for which was the applicant’s initiation of arbitration proceedings, that is to say, the legitimate exercise of a legal remedy. That is also apparent from the letter of 14 February 2019 from the Director-General, who did not provide any reasons in support of the unusual decision to conduct an on-site inspection in a less significant credit institution. 250 The applicant submits that account should be taken of the ECB’s failure to respond to its attempts to engage in a dialogue on the problems of corruption, the unfair regulatory treatment to which it was subjected and the hostile and inappropriate comments which were made publicly by Latvian officials, in particular the threat made by A that there would be a withdrawal of authorisation. Those corruption problems are widely recognised, including by the Latvian authorities, the Organisation for Economic Co-operation and Development (OECD) and the United States of America. In February 2018, those corruption problems led to A’s detention and to security measures, which in practice prevented A from performing his duties as Governor of the Central Bank of Latvia and as a member of the Governing Council of the ECB. The ECB’s only reaction was to bring an action before the Court of Justice (Case C‑238/18) in order to defend its independence against alleged interference by the Republic of Latvia. The ECB took no steps to investigate and rectify the problems at issue in order to restore confidence in the regulatory process. In response to the ECB’s action, the Republic of Latvia confirmed that there was evidence proving A’s acts of corruption, but did not provide that evidence. The applicant submits that, in the present case, it is for the ECB, and not the applicant, to prove that prudential supervision is carried out in a lawful manner. 251 The applicant concludes from this that, in the present case, the ECB did not investigate serious issues relating to the quality of the prudential supervision, but adopted the unusual decision to conduct an on-site inspection in a less significant credit institution without providing any reasons whatsoever. That should be interpreted as conveying the message that criticism of the regulatory authorities leads to heavy retaliation. 252 The applicant requests the General Court to order the ECB and the Republic of Latvia to disclose all relevant correspondence between the ECB and the FCMC so that the real reasons for the contested decision can be determined. 253 The ECB disputes that line of argument. 254 Under Article 19(1) of Regulation No 1024/2013, when carrying out the tasks conferred on it by that regulation, the ECB and the national competent authorities acting within the SSM are to act independently and the members of the Supervisory Board and the steering committee are to act independently and objectively in the interest of the European Union as a whole and are neither to seek nor take instructions from the institutions or bodies of the European Union, from any government of a Member State or from any other public or private body. 255 Recital 75 of that regulation states that, in order to carry out its supervisory tasks effectively, the ECB should exercise the supervisory tasks conferred on it in full independence, in particular free from undue political influence and from industry interference which would affect its operational independence. 256 A measure is vitiated by misuse of powers only if it appears, on the basis of objective, relevant and consistent evidence, to have been taken solely, or at the very least primarily, for purposes other than those for which the power in question was conferred or with the aim of evading a procedure specifically prescribed by the FEU Treaty for dealing with the circumstances of the case (judgments of 14 December 2004, Swedish Match, C‑210/03, EU:C:2004:802, paragraph 75, and of 8 December 2020, Hungary v Parliament and Council, C‑620/18, EU:C:2020:1001, paragraph 82). 257 In the first place, in order to attempt to demonstrate that the contested decision is a retaliatory measure adopted because the applicant and its shareholders complained of the unlawful conduct by a member of the Governing Council of the ECB, the applicant relies on the grounds of the ECB’s decision, notified by letter of 1 March 2019, classifying the applicant as a significant institution subject to direct prudential supervision by the ECB. 258 However, even if that decision of the ECB were unlawful, it would have no effect on the lawfulness of the contested decision, which is not based on the decision relied on by the applicant. 259 In addition, contrary to what the applicant claims, the ECB’s decision to take over direct prudential supervision of the applicant was not adopted on the ground that the applicant initiated the arbitration proceedings. In that decision, the ECB relied not on the initiation of those proceedings, as such, but, in essence, on the ground that, following the ICSID recommendation made in the context of those proceedings, the FCMC considered itself to have no capacity to carry out high-level supervision of the applicant and had requested the ECB to take over the prudential supervision of the applicant. 260 The applicant is therefore not entitled to claim that the ECB’s decision to take over the direct prudential supervision of the applicant is based on the legitimate exercise of a legal remedy, namely the initiation of the arbitration proceedings, or, in any event, that the ECB’s reasons demonstrate its desire to adopt retaliatory measures against the applicant for having initiated such proceedings. 261 In the second place, the contested decision sets out the grounds on which the ECB decided to conduct an on-site inspection at the applicant’s premises. 262 It is apparent from those grounds that the contested decision was adopted with an aim consistent with prudential legislation. In so far as the contested decision is based on deficiencies and infringements relating to prudential requirements identified over previous years, it is consistent with the objective of financial stability. In so far as the ECB took account of the fact that the ICSID recommendation prevented the FCMC from implementing all the supervisory measures in respect of the applicant and decided itself to conduct an on-site inspection at the applicant’s premises, it did not pursue an objective unrelated to its prudential supervision mission, but merely implemented, taking into account that recommendation, a form of prudential supervision expressly provided for in Article 6(5)(d) of Regulation No 1024/2013. 263 Furthermore, it is apparent from the response to the second and fourth pleas in law that the ECB did not misconstrue the scope of its discretion in taking the view that an on-site inspection was necessary within the meaning of Article 12(1) of Regulation No 1024/2013 and consistent with the principle of proportionality, which is an additional factor in support of the finding that the ECB did not vitiate its decision by a misuse of powers. 264 In the third place, for the same reasons as those stated in paragraphs 243 to 245 above, the applicant’s argument that the ECB did not open an investigation into the acts of corruption complained of by CR or into the statements made by A following his arrest is not probative evidence capable of demonstrating that the ECB’s aim, in adopting the contested decision, was to take a retaliatory measure against the applicant in relation to the reporting of those acts of corruption. 265 In the fourth place, as regards the alleged unfair regulatory treatment associated with the acts of corruption which it complains of, the applicant does not explain precisely which administrative measures are, in its view, vitiated by illegality or, in any event, how the unlawfulness of those acts, even if demonstrated, is such as to render the contested decision itself unlawful. 266 In the fifth place, although the applicant claims that A was a member of the Governing Council of the ECB, the contested decision was adopted on 21 January 2019, whereas, according to the applicant, on that date, the security measures adopted by the KNAB on 19 February 2018 in practice prevented A from performing his duties as a member of the Governing Council of the ECB and from sitting within that body. 267 Lastly, in the light of the considerations set out in paragraphs 257 to 266 above, there is no need to grant the applicant’s request that the Court order the ECB and the Republic of Latvia to disclose ‘all relevant correspondence between the ECB and the FCMC [concerning the applicant] so [as] to determine the true motivation behind the Contested Decision’. 268 The Court has before it the information enabling it to resolve the present dispute and considers, inter alia, that the grounds of the contested decision are apparent from that decision. 269 Thus, it is not apparent from the documents in the file that the contested decision was adopted in breach of Article 19 of Regulation No 1024/2013. Nor does it appear, on the basis of a body of objective, relevant and consistent evidence, that the contested decision was adopted with the aim of retaliation against the applicant in relation to the complaints as to A’s allegedly illegal conduct or that the contested decision is, for that reason, vitiated by a misuse of powers. 270 The tenth plea in law must therefore be rejected as unfounded. 271 It follows from all of the foregoing that the action must be dismissed. VI. Costs 272 Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the costs incurred by the ECB, in accordance with the form of order sought by the ECB. 273 The Commission shall bear its own costs, in accordance with Article 138(1) of the Rules of Procedure. On those grounds, THE GENERAL COURT (Fourth Chamber, Extended Composition) hereby: 1. Dismisses the action; 2. Orders PNB Banka AS to bear its own costs and pay those incurred by the European Central Bank (ECB); 3. Orders the European Commission to bear its own costs. Gervasoni Madise Nihoul Frendo Martín y Pérez de Nanclares Delivered in open court in Luxembourg on 7 December 2022. E. Coulon S. Papasavvas Registrar President * Language of the case: English.