62018TJ0280_RES
Case T‑280/18
ABLV Bank AS
v
Single Resolution Board
Judgment of the General Court (Tenth Chamber, Extended Composition), 6 July 2022
(Economic and monetary union – Banking union – Single resolution mechanism for credit institutions and certain investment firms (SRM) – Resolution procedure applicable where an entity is failing or is likely to fail – Decision of the SRB not to adopt a resolution scheme – Action for annulment – Act adversely affecting a person – Interest in bringing proceedings – Standing to bring proceedings – Inadmissibility in part – Article 18 of Regulation (EU) No 806/2014 – Power of the author of the measure – Right to be heard – Obligation to state reasons – Proportionality – Equal treatment)
Action for annulment – Actionable measures – Concept – Measures producing binding legal effects – Right to effective judicial protection – Decision of the Single Resolution Board (SRB) to adopt or not to adopt a resolution scheme – Included
(Art. 263 TFEU; Charter of Fundamental Rights of the European Union, Art. 47; European Parliament and Council Regulation No 806/2014, Arts 18 and 86(2))
(see paragraphs 30-36)
Action for annulment – Natural or legal persons – Measures of direct and individual concern to them – Whether directly affected – Criteria – Decision of the Single Resolution Board (SRB) to adopt or not to adopt a resolution scheme – Determination as to whether the effects of that decision on the legal position of shareholders of a credit institution are direct – No effect on the right of shareholders to receive dividends and participate in the management of that institution – Not individually affected – Inadmissibility
(Art. 263, fourth para., TFEU)
(see paragraphs 39, 41-45)
Action for annulment – Natural or legal persons – Measures of direct and individual concern to them – Whether directly affected – Criteria – Decision of the Single Resolution Board (SRB) to adopt or not to adopt a resolution scheme – Determination as to whether the effects of that decision on the legal position of shareholders of a credit institution are direct – Purely automatic implementation – Admissibility
(Art. 263, fourth para., TFEU; European Parliament and Council Regulation No 806/2014, Art. 18)
(see paragraphs 47, 48, 50-52)
Economic and monetary policy – Economic policy – Single resolution mechanism for credit institutions and certain investment firms – Adoption of a resolution scheme – Prerequisites – Essential prerequisite of assessment by the Single Resolution Board (SRB) concerning whether the entity concerned is failing or likely to fail – Assessment based on the conclusion of the European Central Bank (ECB) – Whether permissible
(European Parliament and Council Regulation No 806/2014, Art. 18)
(see paragraphs 47, 48, 57)
Action for annulment – Natural or legal persons – Interest in bringing proceedings – Prerequisites – Decision of the Single Resolution Board (SRB) to adopt or not to adopt a resolution scheme – Assessment concerning whether the entity concerned is failing or likely to fail – Essential prerequisite triggering the resolution procedure – That entity’s legitimate interest in not being the subject of an assessment that concludes that it is failing or likely to fail – Included
(Art. 263, fourth para., TFEU; European Parliament and Council Regulation No 806/2014, Art. 18)
(see paragraphs 54, 57-60)
Economic and monetary policy – Economic policy – Single resolution mechanism for credit institutions and certain investment firms – Single Resolution Board (SRB) – Power – Decision whether or not to adopt a resolution scheme – Obligation to take such a decision following an assessment by the European Central Bank (ECB) concerning whether the entity concerned is failing or likely to fail
(European Parliament and Council Regulation No 806/2014, Art. 18(1); European Parliament and Council Directive 2014/59, Art. 82(2))
(see paragraphs 81-83)
Economic and monetary policy – Economic policy – Single resolution mechanism for credit institutions and certain investment firms – Decision not to adopt a resolution scheme – Prerequisites – Assessment concerning whether the entity concerned is failing or likely to fail – Separate functions of the Single Resolution Board (SRB) and the European Central Bank (ECB) – Shared power of a primary, albeit not exclusive, role of the ECB
(European Parliament and Council Regulation No 806/2014, Art. 18(1), second subparagraph)
(see paragraphs 105, 106, 108)
Economic and monetary policy – Economic policy – Single resolution mechanism for credit institutions and certain investment firms – Resolution procedure – Right to be heard – Scope – Procedure led by the European Central Bank (ECB) and the Single Resolution Board (SRB) jointly and successively – Complex administrative procedure – Obligation on each of those two bodies to hear the entity concerned by the decision to adopt or not to adopt a resolution scheme at each phase of the procedure – None
(Charter of Fundamental Rights of the European Union, Art. 41(2)(a); European Parliament and Council Regulation No 806/2014, Art. 18)
(see paragraphs 156-163, 165)
Résumé
The applicant, ABLV Bank AS, is a Latvian credit institution and the parent company of the ABLV group. ABLV Bank Luxembourg SA is a credit institution established in Luxembourg and is one of the subsidiaries of the ABLV group; the applicant is the sole shareholder of ABLV Luxembourg. Those two institutions were categorised as ‘significant entities’ and as such were subject to supervision by the European Central Bank (ECB) under the Single Supervisory Mechanism (SSM). (
1
)
On 13 February 2018, the United States Department of the Treasury announced a proposed measure to designate the applicant as an institution of primary money laundering concern. Following that announcement, the applicant was no longer able to make payments in dollars and experienced a wave of deposit withdrawals. The ECB therefore instructed the Finanšu un kapitāla tirgus komisija (Financial and Capital Markets Commission, Latvia) to impose a moratorium to allow the applicant to stabilise its situation. On 23 February 2018, the ECB concluded that the applicant was failing or likely to fail. By two decisions of 23 February 2018, concerning the applicant and ABLV Luxembourg, respectively, the Single Resolution Board (SRB), reproducing the ECB’s conclusion, nevertheless took the view that resolution action in respect of them was not necessary in the public interest. (
2
)
The General Court, hearing an action for annulment of those two decisions, rules for the first time on a decision of the SRB not to adopt a resolution scheme and concludes that the action should be dismissed in its entirety.
Findings of the Court
At the outset, the Court examines the pleas of inadmissibility raised by the SRB.
First, in the light of the case-law of the Court of Justice, (
3
) it concludes that the decision not to adopt resolution tools in respect of a credit institution is an act open to challenge. Since some of those tools may enable the applicant to continue part of its activities, such a decision produces binding legal effects such as to affect its interests. That classification, moreover, enables the right to effective judicial protection to be observed.
Second, the General Court dismisses the action against the decision relating to ABLV Luxembourg as inadmissible on the ground that the applicant does not have standing to bring proceedings. That decision directly affects only the legal situation of its addressee, ABLV Luxembourg. The adverse effect of that decision on the applicant is economic and not legal in nature, since the right of shareholders to receive dividends and to participate in the management of that company remains unchanged.
As regards the decision relating to the applicant, the Court concludes that the applicant has standing to bring proceedings against that decision, since the latter directly affects its position. The SRB’s conclusion, based on the ECB’s assessment that the applicant is failing or is likely to fail (‘the FOLTF assessment’), constitutes the necessary justification for taking a decision not to adopt resolution action. Moreover, that decision does not leave any discretion to the national regulatory authority responsible for implementing it, that implementation being purely automatic and resulting from EU rules alone.
Third, the Court finds that the applicant has an interest in bringing proceedings against that decision. If it were to conclude that the ECB’s FOLTF assessment, which was reproduced by the SRB, was incorrect, the procedure which led to the adoption of such a decision should not have been triggered in respect of the applicant. Furthermore, with a view to carrying out its banking activities, the entity concerned has a legitimate interest in not being subject to such an assessment.
The Court then moves on to reject all of the substantive pleas raised by the applicant.
In particular, first, the Court notes that the applicant is incorrect to criticise the SRB for having relied solely on the ECB’s FOLTF assessment, without carrying out its own examination. In that regard, it notes that it is true that the SRB is not bound by that ECB assessment and that there is nothing to indicate that it would have no power to make an assessment in that regard. However, the SRM Regulation (
4
) gives the ECB a primary – albeit not exclusive – role, since it is the ECB that is best placed to carry out such an assessment given its expertise as a supervisory authority.
Second, the Court notes that the assessments made by the ECB, which the SRB endorsed, namely those relating, on the one hand, to the applicant’s counterbalancing capacity and, on the other hand, to the FOLTF assessment, were not vitiated by a manifest error. The Court found that, in circumstances such as those of the present case characterised by huge withdrawals of deposits following a breakdown in confidence between the credit institution and its customers, the ECB could reasonably attach less importance to the applicant’s cover ratio and capitalisation and rely above all on the immediate availability of liquidity. Accordingly, it concludes that, in the light of the discretion enjoyed by the SRB, it did not make a manifest error of assessment in finding that the applicant was failing or was likely to fail.
Third, the Court concludes that the SRB did not err in law in relying on the ECB’s FOLTF assessment in order to verify that there was no reasonable prospect that other alternative measures could prevent its failure within a reasonable timeframe. Although the examination of such measures is separate from that assessment, it finds that, in the present case, the ECB integrated that examination into that assessment.
Fourth, the Court finds that the applicant’s right to be heard was not infringed. It holds that, in the light of the nature of the complex administrative procedure at issue, conducted by the ECB and the SRB jointly and successively, there is no requirement that the entity concerned be heard at each stage of the procedure by each of those two bodies separately. In the present case, the applicant was heard by the ECB on several occasions and was therefore given an opportunity to express its views, with the result that the SRB was fully aware of its arguments when it adopted the decision, in which it endorsed the ECB’s assessments.
(
1
)	Under Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ 2013 L 287, p. 63).
(
2
)	Within the meaning of Article 18 of Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ 2014 L 225, p. 1) (‘the SRM Regulation’).
(
3
)	Judgment of 6 May 2021, ABLV Bank and Others v ECB (C‑551/19 P and C‑552/19 P, EU:C:2021:369).
(
4
)	Art. 18(1), second subparagraph, of the SRM Regulation.