62016TJ0466(01)_RES
Case T‑466/16 RENV
NRW.Bank
v
Single Resolution Board
Judgment of the General Court (Eighth Chamber, Extended Composition) of 21 February 2024
(Economic and monetary union – Banking union – Single resolution mechanism for credit institutions and certain investment firms (SRM) – Single Resolution Fund (SRF) – Decision of the SRB on the calculation of the 2016 ex ante contributions – Duty to state reasons – Principle of non-retroactivity – Article 5(1)(f) of Delegated Regulation (EU) 2015/63 – Exclusion of certain liabilities from the calculation of ex ante contributions – Promotional loans – Ancillary promotional activities – Plea of illegality)
Economic and monetary policy – Economic policy – Recovery and resolution of credit institutions and investment firms – Promotional bank – Calculation of the ex ante contributions to Single Resolution Fund (SRF) – Exclusion of liabilities related to promotional loans from that calculation – Scope – Liability related to an ancillary promotional activity carried on in a competitive, for-profit environment – Exclusion
(Commission Regulation 2015/63, recital 13 and Arts 3, point 28, and 5(1)(f))
(see paragraphs 45, 50, 58-63, 261)
EU institutions – Exercise of powers – Power conferred on the Commission to adopt delegated acts – Scope – Complex assessments and evaluations – Broad discretion – Directive 2014/59 establishing a framework for the recovery and resolution of credit institutions and investment firms – Establishment of the criteria for adjusting ex ante contributions – Judicial review – Limits
(Art. 290 TFEU; European Parliament and Council Regulation No 806/2014, recital 41; European Parliament and Council Directive 2014/59)
(see paragraphs 90, 91, 97, 98, 112)
Acts of the institutions – Temporal application – Non-retroactivity – Exceptions – Conditions – Accomplishment of an objective in the general interest and respect for legitimate expectations – Withdrawal of a decision of the Single Resolution Board (SRB) determining the ex ante contributions to the Single Resolution Fund (SRF) in order to remedy a failure to state reasons – Adoption of a decision entering into force on the date on which the previous decision takes effect – No changes to the amount or the calculation of those contributions – Account taken of the objective of contributions to the SRF – Whether permissible
(European Parliament and Council Regulation No 806/2014, Arts 2, 67(4), 69 and 70)
(see paragraphs 170, 172, 173)
EU law – Principles – Rights of the defence – Right to be heard – Scope – Communication from the Single Resolution Board (SRB) informing the applicant of the withdrawal of a decision and its replacement – Whether permissible – No infringement of the right to be heard
(Charter of Fundamental Rights of the European Union, Art. 41(2)(a))
(see paragraphs 235, 243)
Acts of the institutions – Statement of reasons – Obligation – Scope – Decision of the Single Resolution Board (SRB) establishing the ex ante contributions to the Single Resolution Fund (SRF) – Obligation for the SRB to communicate to the institutions concerned the method of calculating those contributions and the method of determining the amount of the annual target level
(European Parliament and Council Regulation No 806/2014, Arts 69(1) and (2) and 70(2); Council Regulation 2015/81, Art. 4; Commission Regulation 2015/63, Art. 4(2); European Parliament and Council Directive 2014/59)
(see paragraphs 283, 292-303)
Résumé
Hearing an action for annulment, which it dismisses, against Decision SRB/ES/2022/23 of the Single Resolution Board (SRB) of 27 April 2022 (‘the contested decision’), the General Court provides important clarifications concerning, first, the calculation of the ex ante contributions to the Single Resolution Fund (SRF), in particular as regards the interpretation and application of Article 5(1)(f) of Delegated Regulation 2015/63, (
1
) and, second, the statement of reasons for the determination of the annual target level of the SRF for the 2016 contribution period.
NRW.Bank, the applicant, is the promotional bank of the Land Nordrhein-Westfalen (Land of North Rhine-Westphalia, Germany).
On 15 April 2016, the SRB adopted a decision on the 2016 ex ante contributions to the Single Resolution Fund (SRB/ES/SRF/2016/06) of credit institutions and certain investment firms, including the applicant. On 20 May 2016, the SRB adopted a decision on the adjustment of the 2016 ex ante contributions to the Single Resolution Fund supplementing the SRB’s Decision of 15 April 2016 on the 2016 ex ante contributions to the Single Resolution Fund (SRB/ES/SRF/2016/13). Hearing an action for annulment brought by the applicant against those two decisions (‘the initial decisions’), the General Court, by judgment of 26 June 2019, NRW.Bank v SRB (T‑466/16), (
2
) dismissed the action as inadmissible. By judgment of14 October 2021, NRW.Bank v SRB (C‑662/19 P), (
3
) the Court of Justice, hearing an appeal brought by the applicant, set aside the judgment of the General Court and referred the case back to the General Court. On 27 April 2022, the SRB adopted the contested decision, by which it withdrew and replaced the initial decisions, with a view to remedying the failure to state reasons for those decisions which it had determined further to judgments of the General Court. (
4
)
Findings of the Court
In the first place, the applicant claims that Article 5(1)(f) of Delegated Regulation 2015/63 must be interpreted as allowing the exclusion from the calculation of the ex ante contributions of the liabilities related to ‘ancillary promotional’ activities, which consist in particular in the acquisition of debt securities on the capital market (‘the activities concerned’). The Court notes that those provisions establish that the liabilities at issue can be excluded from the calculation of ex ante contribution of the institution concerned only up to the amount of the promotional loans operated by that institution. In order to be classifiable as ‘promotional loans’, the transactions in question must be carried out on a non-competitive, not-for-profit basis. (
5
) The Court finds that the activities concerned are performed, first, on the open capital market on which other actors operate; those actors carry on the same types of activities and are able to acquire the same debt securities as promotional banks, and on the same market terms as such banks. In addition, on such a market, promotional banks are, by definition, in direct competition with those other market operators, and therefore the activities concerned cannot be regarded as being carried out on a non-competitive basis. Second, the purpose of the activities concerned is to generate – and they do generate – revenue, because they consist in producing interest margins in order to finance the banking activity as such of promotional banks. Those activities cannot therefore be regarded as being carried out on a not-for-profit basis.
That conclusion is not called into question by the applicant’s argument that the ‘ultimate objective’ of those activities is not to generate a profit because it is prohibited from distributing dividends. The not-for-profit nature of an activity (
6
) is assessed having regard to the nature of each activity concerned, it being irrelevant whether or not the profits generated by that activity are subsequently used to finance promotional activities which are, for their part, carried out on a not-for-profit basis. Any other interpretation would mean regarding the activities concerned as being of a not-for-profit nature solely because they are carried on by a promotional bank; this would render meaningless the condition laid down by the use of the words ‘on a non-competitive, not for profit basis’. (
7
)
Accordingly, the Court concludes that Article 5(1)(f) of Delegated Regulation 2015/63, read in conjunction with Article 3, points 27 and 28, of that same delegated regulation, must be interpreted as not allowing the liabilities related to the ancillary promotional activities of promotional banks, such as the applicant, to be excluded from the calculation of their ex ante contribution.
In the second place, the Court observes that, in the context of a delegated power within the meaning of Article 290 TFEU, the European Commission enjoys broad discretion in the exercise of the powers conferred on it where it is called upon, inter alia, to make complex assessments and evaluations. The Court takes the view that this is the case as regards the determination of the rules specifying the notion of adjusting ex ante contributions in proportion to the risk profile of institutions. (
8
) In those circumstances, with regard to the method of risk adjustment of the basic annual contributions, the review by the Courts of the European Union must be limited to examining whether the exercise of the discretion afforded to the Commission is vitiated by a manifest error or a misuse of power, or whether the Commission has manifestly exceeded the limits of that discretion. The Court considers that the applicant has failed to demonstrate that Article 5(1)(f) of Delegated Regulation 2015/63 was vitiated by a manifest error or a misuse of power or that it had manifestly exceeded the limits of the Commission’s discretion because it did not exclude the liabilities related to the ancillary promotional activities of regional promotional banks from the calculation of their ex ante contribution.
In the third place, the Court recalls that the contested decision was adopted in order to remedy a failure to state reasons for the initial decisions determined by the SRB further to judgments of the Court, but that that decision and those judgments did not alter the scope of the applicant’s obligation to pay an ex ante contribution for the 2016 contribution period, as had been ordered by the initial decisions and as had existed for that contribution period. In those specific circumstances, if the SRB had not adopted the contested decision and given effect to it from the date on which the first of the initial decisions took effect, the contested decision could not have been effective over the period from 15 April 2016 to 27 April 2022, during which the applicant would have been exempted from its obligation to pay an ex ante contribution for the 2016 contribution period, even though it was subject to that obligation pursuant to Regulation No 806/2014. (
9
) Similarly, over that period, the SRF would have been deprived, in breach of those same provisions, of the funds from the applicant’s ex ante contributions, which would have undermined the implementation of Directive 2014/59, of Regulation No 806/2014 and of Delegated Regulation 2015/63. Accordingly, the purpose of adopting the contested decision with effect from 15 April 2016 was to ensure synchronicity between the applicability of the contested decision and the time at which the applicant’s obligation to pay a 2016 ex ante contribution had come into being and, thus, to avoid a result contrary to the applicable legislation. In addition, in order to achieve such a goal, that decision had to enter into force on a date prior to that on which it was adopted.
In the fourth and final place, the Court recalls that institutions liable to the ex ante contributions must be able to understand, on reading the decision determining those contributions, at least the main stages of the method of calculating the amount of the annual target level for the contribution period in question.
With regard to the adequacy of the statement of reasons for the contested decision, the Court observes that the 2016 contribution period corresponds to the first year of the initial eight-year period. It is apparent from the contested decision that the SRB determined the annual target level by undertaking the following two main stages. First, it determined the forecast amount of the final target level and, secondly, it divided that amount by eight in order to take account of the fact that the initial period comprised eight contribution years. However, there is nothing to indicate that the calculation of the annual target level for the 2016 contribution period was made using a different mathematical formula from that contained in the contested decision or that it included other additional stages not set out in the contested decision. In those circumstances, the General Court takes the view that the SRB did set out, in the contested decision, the main stages of the method of calculating the amount of the annual target level for the 2016 contribution period.
As regards the forecast amount of the final target level, the Court observes that that amount can be deduced from the mathematical formula contained in the contested decision.
As for the manner in which it determined the forecast amount of the final target level, the SRB based its analysis on the fact that, according to Regulation No 806/2014, that amount had to correspond to at least 1% of the amounts of the covered deposits, at the end of the initial period, of all of the institutions authorised in all of the Member States participating in the Single Resolution Mechanism. In that regard, it took into account the forecast evolution in the covered deposits of all of the institutions authorised in all of the participating Member States, from the amount of those deposits as it stood in 2015 and until the end of the initial period, that is to say, until the end of 2023. Furthermore, the SRB identified, initially, an annual growth rate of those covered deposits of 3% between 2015 and 2023, but subsequently scaled down that percentage in order to take into account the analysis of the phase of the business cycle and the potential pro-cyclical impact the ex ante contributions might have on the financial position of the institutions. It thus applied an annual growth rate of covered deposits of less than 3% between 2015 and 2023 in order to determine the final target level.
Lastly, the Court observes that, when the annual target level for the 2016 contribution period was determined, the SRB did not have reliable data on the likely evolution of the institutions’ covered deposits between 2015 and 2023, because a re-definition of the covered deposits had been introduced only one year earlier. (
10
) Without such data, the SRB had to evaluate the forecast development of the deposits on the basis of the growth rates of household deposits and the deposits of non-financial commercial companies.
In those specific circumstances, and given that, in addition, the contested decision related to the first contribution period following the adoption of Regulation No 806/2014, the institutions, as prudent operators, could reasonably expect that, in order to determine the annual target level for that period, the SRB would also take into account the forecast amount of the final target level, as set out in the explanatory memorandum to the Commission proposal which led to the adoption of that regulation. (
11
)
The Court therefore takes the view that the institutions were in a position to understand the main rules in accordance with which the SRB would determine the final target level, with a view to determining the annual target level for the 2016 contribution period.
(
1
)	Commission Delegated Regulation (EU) 2015/63 of 21 October 2014 supplementing Directive 2014/59/EU of the European Parliament and of the Council with regard to ex ante contributions to the resolution financing arrangements (OJ 2015 L 11, p. 44).
(
2
)	Judgment of 26 June 2019, NRW.Bank v SRB (T‑466/16, not published, EU:T:2019:445).
(
3
)	Judgment of 14 October 2021, NRW.Bank v SRB (C‑662/19 P, EU:C:2021:846).
(
4
)	Judgments of 28 November 2019, Hypo Vorarlberg Bank v SRB (T‑377/16, T‑645/16 and T‑809/16, EU:T:2019:823), and of 28 November 2019, Portigon v SRB (T‑365/16, EU:T:2019:824).
(
5
)	Under Article 3, point 28, of Delegated Regulation 2015/63, ‘promotional loan’ means ‘a loan granted by a promotional bank or through an intermediate bank on a non-competitive, non for profit basis, in order to promote the public policy objectives of central or regional governments in a Member State’.
(
6
)	For the purpose of applying Article 3, point 28, of Delegated Regulation 2015/63.
(
7
)	As provided for in Article 3, point 28, of Delegated Regulation 2015/63.
(
8
)	Pursuant to Article 103(7) of Directive 2014/59 of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ 2014 L 173, p. 190).
(
9
)	Pursuant to Article 2, Article 67(4) and Articles 69 and 70 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).
(
10
)	Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes (OJ 2014 L 173, p. 149).
(
11
)	Commission proposal COM(2013) 520 final of 10 July 2013.