Provisional text

JUDGMENT OF THE GENERAL COURT (Third Chamber, Extended Composition)

1 June 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 – Adoption by the SRB of a resolution scheme in respect of Banco Popular Español – Delegation of power – Right to be heard – Right to property – Obligation to state reasons – Articles 14, 18 and 20 of Regulation (EU) No 806/2014)

In Case T‑628/17,

Aeris Invest Sàrl, established in Luxembourg (Luxembourg), represented by M. Roca Junyent, R. Vallina Hoset, G. Serrano Fenollosa, E. Galán Burgos and M. Varela Suárez, lawyers,

applicant,

v

European Commission, represented by L. Flynn and A. Steiblytė, acting as Agents,

and

Single Resolution Board (SRB), represented by J. King and M. Fernández Rupérez, acting as Agents, and by B. Meyring, S. Schelo, F. Fernández de Trocóniz Robles, T. Klupsch and S. Ianc, lawyers,

defendants,

supported by

Kingdom of Spain, represented by L. Aguilera Ruiz and J. Rodríguez de la Rúa Puig, acting as Agents,

by

European Parliament, represented by P. López-Carceller, M. Martínez Iglesias, L. Visaggio, J. Etienne, M. Menegatti and M. Sammut, acting as Agents,

by

Council of the European Union, represented by A. de Gregorio Merino, J. Bauerschmidt, H. Marcos Fraile and A. Westerhof Löfflerová, acting as Agents,

and by

Banco Santander, SA, established in Santander (Spain), represented by J. Rodríguez Cárcamo, A. Rodríguez Conde, D. Sarmiento Ramírez‑Escudero and J. Remón Peñalver, lawyers,

interveners,

APPLICATION based on Article 263 TFEU for annulment of, first, Decision SRB/EES/2017/08 of the Single Resolution Board in its Executive Session of 7 June 2017 concerning the adoption of a resolution scheme in respect of Banco Popular Español, SA and, secondly, Commission Decision (EU) 2017/1246 of 7 June 2017 endorsing the resolution scheme for Banco Popular Español (OJ 2017 L 178, p. 15),

THE GENERAL COURT (Third Chamber, Extended Composition),

composed of M. van der Woude, President, M. Jaeger, V. Kreuschitz, G. De Baere (Rapporteur) and G. Steinfatt, Judges,

Registrar: J. Palacio González, Principal Administrator,

having regard to the written part of the procedure and further to the hearing on 17 June 2021,

gives the following

Judgment

I. Legal framework

1 Following the 2008 financial crisis, it was decided that a banking union should be set up in the European Union, underpinned by a comprehensive and detailed single rulebook for financial services, valid for the internal market as a whole and composed of a single supervisory mechanism and new frameworks for deposit insurance and resolution.

2 The first step towards the creation of the banking union consisted in the establishment of a single supervisory mechanism (SSM) by 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). Under recital 12 of that regulation, an SSM should ensure that the Union’s policy relating to the prudential supervision of credit institutions is implemented in a coherent and effective manner, that the single rulebook for financial services is applied in the same manner to credit institutions in all Member States concerned, and that those credit institutions are subject to supervision of the highest quality, unfettered by other, non-prudential considerations. To that end, Regulation No 1024/2013 confers on the European Central Bank (ECB) specific tasks concerning policies relating to the prudential supervision of credit institutions, with a view to contributing to the safety and soundness of credit institutions and the stability of the financial system within the Union and each Member State.

3 Subsequently, Directive 2014/59/EU 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) was adopted. Recital 1 thereof states as follows:

‘The financial crisis has shown that there is a significant lack of adequate tools at Union level to deal effectively with unsound or failing credit institutions and investment firms … Such tools are needed, in particular, to prevent insolvency or, when insolvency occurs, to minimise negative repercussions by preserving the systemically important functions of the institution concerned. During the crisis, those challenges were a major factor that forced Member States to save institutions using taxpayers’ money. The objective of a credible recovery and resolution framework is to obviate the need for such action to the greatest extent possible.’

4 The objective of Directive 2014/59 is to establish common rules for minimum harmonisation of national provisions governing the resolution of banks in the European Union and provides for cooperation among resolution authorities when dealing with the failure of cross-border banks. In that regard, Directive 2014/59 provides, inter alia, in Article 3(1), that each Member State is to designate one or, exceptionally, more resolution authorities that are empowered to apply the resolution tools and exercise the resolution powers.

5 However, taking the view, first, that Directive 2014/59 did not lead to the centralisation of decision-making in the field of resolution, that it essentially provided for common resolution tools and resolution powers available for the national authorities of every Member State and left discretion to national authorities in the application of the tools and in the use of national financing arrangements in support of resolution procedures and, secondly, that that directive did not completely avoid the taking of separate and potentially inconsistent decisions by Member States regarding the resolution of cross-border groups, it was decided to establish a single resolution mechanism (SRM).

6 Thus, the second step towards the creation of the banking union consisted in the adoption 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).

7 Recital 12 of Regulation No 806/2014 states:

‘Ensuring effective resolution decisions for failing banks within the Union, including on the use of funding raised at Union level, is essential for the completion of the internal market in financial services. Within the internal market, the failure of banks in one Member State may affect the stability of the financial markets of the Union as a whole. Ensuring effective and uniform resolution rules and equal conditions of resolution financing across Member States is in the best interests not only of the Member States in which banks operate but also of all Member States in general as a means of ensuring a level competitive playing field and improving the functioning of the internal market. Banking systems in the internal market are highly interconnected, bank groups are international and banks have a large percentage of foreign assets. In the absence of the SRM, bank crises in Member States participating in the SSM would have a stronger negative systemic impact also in non-participating Member States. The establishment of the SRM will ensure a neutral approach in dealing with failing banks and therefore increase stability of the banks of the participating Member States and prevent the spill-over of crises into non-participating Member States and will thus facilitate the functioning of the internal market as a whole. The mechanisms for cooperation regarding institutions established in both participating and non-participating Member States should be clear, and no Member State or group of Member States should be discriminated against, directly or indirectly, as a venue for financial services.’

8 According to the first paragraph of Article 1 of Regulation No 806/2014, its purpose is to establish uniform rules and a uniform procedure for the resolution of the entities defined in Article 2 that are established in the participating Member States, namely banks whose home supervisor is the ECB or the national competent authority in Member States whose currency is the euro or in Member States whose currency is not the euro which have established a close cooperation in accordance with Article 7 of Regulation No 1024/2013 (see recital 15 of Regulation No 806/2014).

9 The second paragraph of Article 1 of Regulation No 806/2014 provides that those uniform rules and that uniform procedure are to be applied by the Single Resolution Board (SRB) established in accordance with Article 42 of that regulation, together with the Council and the Commission and the national resolution authorities within the framework of the SRM established by the same regulation. It is also stipulated that the SRM must be supported by a Single Resolution Fund (SRF).

10 Under Article 16(1) of Regulation No 806/2014, the SRB is to decide on a resolution action in relation to a financial institution established in a participating Member State, where the three conditions laid down in Article 18(1) of that regulation are met.

11 The first condition requires the entity to be failing or likely to fail. An assessment of that condition is made by the ECB, after consulting the SRB, or by the SRB and is considered to be met if the entity is in one or more of the situations listed in Article 18(4) of Regulation No 806/2014.

12 The second condition assumes that there is no reasonable prospect that alternative private sector measures or supervisory action would prevent the failure of that entity within a reasonable time frame.

13 The third condition implies that a resolution action is necessary in the public interest, namely that it is necessary for the achievement of one or more of the resolution objectives and winding up of the entity under normal insolvency proceedings would not meet those resolution objectives to the same extent.

14 Article 14 of Regulation No 806/2014 defines the resolution objectives as the following: to ensure the continuity of critical functions; to avoid significant adverse effects on financial stability, in particular by preventing contagion; to protect public funds by minimising reliance on extraordinary public financial support; to protect depositors and investors, and to protect client funds and client assets.

15 Article 20(1) of Regulation No 806/2014 provides that, before deciding on resolution action or the exercise of the power to write down or convert relevant capital instruments, the SRB is to ensure that a fair, prudent and realistic valuation of the assets and liabilities of the entity concerned is carried out by a person independent from any public authority, including the SRB and the national resolution authority, and from the entity concerned.

16 Under Article 20(15) of Regulation No 806/2014, the valuation must be an integral part of the decision on the application of a resolution tool or on the exercise of a resolution power or the decision on the exercise of the write-down or conversion power of capital instruments.

17 Where the conditions laid down in Article 18(1) of Regulation No 806/2014 are met, the SRB adopts a resolution scheme.

18 When acting under the resolution procedure, the SRB, the Council and the Commission must ensure that the resolution action is taken in accordance with certain principles listed in Article 15 of Regulation No 806/2014, which include the principle that the shareholders of the institution under resolution bear first losses and the principle that no creditor is to incur greater losses than would have been incurred if the entity covered by the resolution action had been wound up under normal insolvency proceedings.

19 In the resolution scheme, the SRB determines the application of the resolution tools. Article 22(2) of Regulation No 806/2014 lists the various resolution tools available, namely the sale of business tool, the bridge institution tool, the asset separation tool and the bail-in tool.

20 In the resolution scheme, the SRB may also exercise the power to write down or convert the capital instruments of the entity concerned under the conditions laid down in Article 21 of Regulation No 806/2014. Under Article 19 of Regulation No 806/2014, a resolution action may also involve the granting of State aid or recourse to the SRF.

21 Under Article 18(7) of Regulation No 806/2014, immediately after the adoption of the resolution scheme, the SRB must transmit it to the Commission. Within 24 hours from the transmission of the resolution scheme by the SRB, the Commission is to either endorse the resolution scheme, or object to it with regard to the discretionary aspects thereof, other than those provided for in the third subparagraph, namely compliance with the criterion of public interest or a material modification of the amount of the SRF. As regards the latter discretionary aspects, within 12 hours from the transmission of the resolution scheme by the SRB, the Commission may propose to the Council to object to the resolution scheme adopted by the SRB on the ground that it does not fulfil the criterion of public interest or to approve or object to a material modification of the amount of the SRF provided for in the resolution scheme of the SRB. The resolution scheme may enter into force only if no objection has been expressed by the Council or by the Commission within a period of 24 hours after its transmission by the SRB.

22 Article 18(9) of Regulation No 806/2014 states that the SRB is to ensure that the necessary resolution action is taken to carry out the resolution scheme by the relevant national resolution authorities. The resolution scheme must be addressed to those national resolution authorities and instruct them to take all necessary measures to implement it in accordance with Article 29 of that regulation, by exercising resolution powers.

23 Following the adoption of a resolution action, in accordance with Article 20(16) of Regulation No 806/2014, the SRB must ensure that a valuation is carried out by an independent person for the purposes of assessing whether shareholders and creditors would have received better treatment if the institution under resolution had entered into normal insolvency proceedings. That valuation may lead, pursuant to Article 76(1)(e) of Regulation No 806/2014, to paying compensation to shareholders or creditors if they have incurred greater losses in the resolution process than those they would have incurred in a winding up under normal insolvency proceedings.

II. Background to the dispute and events subsequent to the bringing of the action

24 The applicant, Aeris Invest Sàrl, is a legal person under Luxembourg law, which was a shareholder in Banco Popular Español, SA (‘Banco Popular’) before a resolution scheme was adopted in respect of Banco Popular.

A. The situation of Banco Popular before the resolution scheme was adopted

25 The Banco Popular group, of which Banco Popular was the parent company, was the sixth largest banking group in Spain at the time of the resolution.

26 In 2016, Banco Popular undertook a capital increase of EUR 2.5 billion.

27 On 5 December 2016, the Executive Session of the SRB adopted a resolution plan for the Banco Popular group (‘the 2016 resolution plan’). The preferred resolution tool in the 2016 resolution plan was the bail-in tool provided for in Article 27 of Regulation No 806/2014.

28 On 3 February 2017, Banco Popular published its 2016 annual report in which it disclosed the need for extraordinary provisions in the sum of EUR 5.7 billion, leading to consolidated losses of EUR 3.485 billion, and the appointment of a new chairman.

29 On 10 February 2017, DBRS Ratings Limited (DBRS) (now DBRS Morningstar) downgraded Banco Popular’s rating, with a negative outlook, in view of Banco Popular’s weakened capital position following a net loss which was higher than that anticipated in its annual report, mentioned in paragraph 28 above, and the bank’s struggle to reduce its elevated stock of non-performing assets.

30 On 3 April 2017, Banco Popular announced the results of internal audits, indicating that corrections to its 2016 annual report might be required. Those adjustments were made in Banco Popular’s financial report for the first quarter of 2017.

31 At the general shareholders’ meeting of Banco Popular on 10 April 2017, the Chairman of the Board of Directors announced that the bank envisaged either a further capital increase or a corporate transaction to address the group’s capital position and its level of non-performing assets. The Chief Executive Officer (CEO) of Banco Popular was replaced after less than one year in his position.

32 Following the announcement of 3 April 2017 on the need to adjust the financial results of 2016, DBRS, on 6 April, downgraded Banco Popular’s rating, again with a negative outlook. On 7 April, Standard & Poor’s, and on 21 April 2017, Moody’s Investors Service (‘Moody’s’) also downgraded Banco Popular’s rating with a negative outlook.

33 In April 2017, Banco Popular initiated a private sale process with a view to achieving its sale to a strong competitor, which would restore its financial situation. The deadline for potential purchasers interested in acquiring Banco Popular to submit their bids was initially set at 10 June 2017 and then delayed until the end of June 2017.

34 On 5 May 2017, Banco Popular presented its financial report for the first quarter of 2017, reporting losses of EUR 137 million.

35 On 12 May 2017, the liquidity coverage requirement of Banco Popular dropped below the minimum threshold of 80% set by Article 460(2)(c) of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ 2013 L 176, p. 1).

36 By letter of 16 May 2017, Banco Santander, SA informed Banco Popular that it could not make a concrete bid in the context of the private sale process.

37 On 16 May 2017, in a communication of a relevant fact to the Comisión nacional del mercado de valores (National Securities Market Commission, Spain, ‘CNMV’), Banco Popular stated that potential purchasers had expressed an interest in the private sale process, but that it had not received any concrete bids.

38 On 19 May 2017, FITCH downgraded Banco Popular’s long-term rating.

39 On 23 May 2017, the Chair of the SRB, Ms Elke König, granted an interview to the television channel Bloomberg, in which she was questioned, inter alia, on the situation of Banco Popular.

40 In May 2017, several press articles reported on the difficulties faced by Banco Popular. By way of example, it is worth mentioning an article of 11 May 2017, published on the website elconfidencial.com, entitled ‘Saracho orders the urgent sale of Popular to JP Morgan and Lazard due to risk of insolvency’ (Saracho encarga la venta urgente del Popular a JP Morgan y Lazard por riesgo de quiebra). That article states that the chairman of the bank had instructed JP Morgan and Lazard to organise the urgent sale of the bank due to a risk of insolvency, as a result of the massive outflow of deposits by private and institutional clients, and that he considered that the only way of ensuring the viability of the bank was the complete and imminent sale of the entire group. The article states that, ‘in view of persistent deposit outflows and the closure of external sources of financing, the bank ran a serious risk of insolvency and that [its chairman] was therefore forced to activate the most drastic measure and gradually refrain from selling its assets in order to improve its own fund ratios and meet the requirements of the ECB’.

41 On 15 May 2017, an article published on the website elconfidencial.com, entitled ‘The ECB inspects Banco Popular for two months in full sales process’ (El BCE inspecciona a Banco Popular durante dos meses en pleno proceso de venta), reported that the sales plan for Banco Popular, implemented by its chairman, took place after the ECB’s inspection, which had confirmed the gap in provisions. According to that article, the ECB inspectors had concluded that Banco Popular’s difficulties were associated with its stock deficit to cover its property exposure and that it was necessary to avoid occasional withdrawals of deposits. The inspectors also expressed their dissatisfaction with the presentation of the 2016 accounts.

42 On 31 May 2017, Reuters news agency published an article entitled ‘EU warned of wind-down risk for Spain’s Banco Popular’. That article states inter alia that, according to an EU official who remained anonymous, one of Europe’s top bank watchdogs had warned EU officials that Banco Popular may need to be wound down if it failed to find a buyer. According to that article, that official also stated that the Chair of the SRB had recently issued an ‘early warning’ and had declared that the SRB was following the (Banco Popular) procedure with particular attention with a view to a possible intervention.

43 On the same day, the SRB published a press release disputing the content of that article.

44 In the first days of June 2017, Banco Popular had to face massive liquidity outflows.

45 On the morning of 5 June 2017, Banco Popular submitted an initial request for emergency liquidity assistance to Banco de España (Bank of Spain), then a second request, in the afternoon, containing an extension of the amount requested on account of extremely acute liquidity movements. On the basis of a request from the Bank of Spain and following the ECB’s assessment on the same day concerning Banco Popular’s request for emergency liquidity assistance, the Governing Council of the ECB did not raise any objections to urgent liquidity assistance to Banco Popular for the period up to 8 June 2017. Banco Popular received part of that emergency liquidity assistance, then the Bank of Spain stated that it was not in a position to provide additional emergency liquidity assistance to Banco Popular.

46 On 6 June 2017, DBRS and Moody’s downgraded Banco Popular’s rating.

B. Other facts prior to the adoption of the resolution scheme

47 On 23 May 2017, the SRB hired Deloitte as an independent expert to carry out a valuation of Banco Popular in accordance with Article 20 of Regulation No 806/2014.

48 On 24 May 2017, on the basis of Article 34 of Regulation No 806/2014, the SRB asked Banco Popular to supply the information required in order to carry out its valuation. On 2 June 2017, Banco Popular was also asked to supply information about the private sale process and to be ready to provide access to the secure virtual data room that it had established in the context of that process.

49 On 3 June 2017, the Executive Session of the SRB adopted Decision SRB/EES/2017/06, addressed to the Fondo de Reestructuración Ordenada Bancaria (Fund for Orderly Bank Restructuring, Spain, ‘the FROB’), concerning the marketing of Banco Popular (‘the decision on marketing’). The SRB approved the immediate launching of the marketing of Banco Popular by the FROB and informed the latter of the requirements concerning the sale, in accordance with Article 39 of Directive 2014/59. In particular, the SRB instructed the FROB to contact the five potential purchasers which had been invited to submit offers in the context of the private sale process.

50 Of the five potential purchasers, two decided not to participate in the marketing process and one was excluded by the ECB for prudential reasons.

51 On 4 June 2017, the two potential purchasers which had decided to participate in the marketing process, Banco Santander and Banco Bilbao Vizcaya Argentaria, SA (BBVA), signed a non-disclosure agreement and on 5 June 2017 were given access to the virtual data room.

52 On 5 June 2017, the SRB adopted a first valuation (‘valuation 1’), pursuant to Article 20(5)(a) of Regulation No 806/2014, which had the objective of informing the determination whether the conditions for resolution, as defined in Article 18(1) of Regulation No 806/2014, were met.

53 On 6 June 2017, the ECB made a ‘failing or likely to fail’ assessment of Banco Popular, after consulting the SRB, in accordance with the second subparagraph of Article 18(1) of Regulation No 806/2014.

54 In that assessment, the ECB stated that, over the preceding months, Banco Popular had experienced a substantial deterioration of its liquidity position, primarily driven by a significant depletion of its deposit base. Banco Popular was confronted with material cash outflows across all customer segments. The ECB listed the events which had led to the liquidity problems faced by Banco Popular.

55 In that regard, the ECB noted that, in February 2017, when presenting its annual accounts, Banco Popular had disclosed the need for extraordinary provisions in the sum of EUR 5.7 billion, leading to losses of EUR 3.485 billion for 2016, and replaced its long-standing chairman who had initiated a revision of the bank’s strategy. The announcement of additional provisions and year-end losses led to Banco Popular’s rating being downgraded by DBRS on 10 February 2017 and caused significant concerns on the part of Banco Popular’s customer base, which were reflected by significant unexpected deposit withdrawals and a high frequency of customer visits to the bank’s branches.

56 The ECB also stated that the release by Banco Popular of an ad hoc disclosure on 3 April 2017, reporting on the outcome of several internal audits with a potentially significant impact on the bank’s financial statements, and the confirmation that the bank’s CEO would be replaced after less than one year in office, triggered another wave of deposit outflows. The ECB noted that that wave was also fuelled by:

– a downgrade of Banco Popular’s rating by Standard & Poor’s on 7 April 2017;

– an announcement by Banco Popular, on 10 April 2017, that it would not pay dividends and that a capital increase or corporate transaction could be required due to its tight capital position and the necessary alignment of the non-performing assets’ coverage to its peers;

– a downgrade of Banco Popular’s rating by Moody’s on 21 April 2017;

– the disclosure of worse-than-expected results for the first quarter of 2017;

– continuous negative media coverage such as the articles of 11 May and 15 May 2017, referred to in paragraphs 40 and 41 above, suggesting that the Chairman of Banco Popular had mandated an urgent sale of the bank due to the imminent risk of bankruptcy or illiquidity and that the bank was facing a significant additional need for provisioning resulting from an on-site inspection by the supervisor.

57 The ECB also found that deposits lost since 31 May 2017 were particularly relevant, after disclosure in the media of the fact that the bank could face wind-down if the current sale process was not successful within a very short period.

58 In addition, the ECB noted that, while Banco Popular had developed various additional liquidity generating measures over the preceding weeks and started to implement them, the magnitude of the realised and still expected inflows was insufficient to remedy the depletion of Banco Popular’s liquidity position on the date of the assessment. The ECB also stated that, even with the recourse to the emergency liquidity assistance in respect of which the Governing Council of the ECB had not raised any objections on 5 June 2017, the liquidity situation on that date did not suffice to ensure Banco Popular’s ability to meet its liabilities by 7 June 2017 at the latest.

59 The ECB considered that the measures already put in place by Banco Popular had not been sufficient to reverse the deterioration of its liquidity position. It stated that, as an alternative measure to ensure its capacity to meet all liabilities as they fell due, Banco Popular was trying to implement a corporate transaction, namely its sale to a stronger competitor. However, the ECB considered that, in view of the deterioration of Banco Popular’s liquidity position and the lack of evidence of its capacity to turn around its liquidity situation in the near future, together with the fact that negotiations had so far not led to a positive outcome, confirmation of such a private transaction was not foreseeable in a time frame that would allow Banco Popular to be able to pay its debts or other liabilities as they fell due.

60 The ECB considered that, at the same time, there were no available supervisory or early intervention measures that could immediately restore the liquidity position of Banco Popular and allow it sufficient time to implement a corporate transaction or other solution. The measures available to the ECB as the competent authority under the national transposition of Article 104 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 of Articles 27 to 29 of Directive 2014/59, or of Article 16 of Regulation No 1024/2013, could not ensure that Banco Popular would be in a position to pay its debts or other liabilities as they fell due, given the extent and pace of the liquidity deterioration observed.

61 In conclusion, taking into account, in particular, the excessive deposit outflows, the speed at which liquidity had been lost from the bank and the inability of the bank to generate further liquidity, the ECB considered that there were objective elements indicating that Banco Popular was likely, in the near future, to be unable to pay its debts or other liabilities as they fell due. The ECB concluded that Banco Popular was deemed to be failing or in any case likely to fail in the near future, in accordance with Article 18(1)(a) and (4)(c) of Regulation No 806/2014.

62 On 6 June 2017, the Board of Directors of Banco Popular informed the ECB that it had reached the conclusion that the bank was likely to fail.

63 On the same day, the FROB issued a letter containing information on the marketing process (‘the letter of procedure’) setting the deadline for the submission of bids at midnight on 6 June 2017.

64 Still on the same day, BBVA, one of the two potential purchasers of Banco Popular, informed the FROB that it would not be making a bid.

65 Also on 6 June 2017, Deloitte submitted a second valuation (‘valuation 2’) to the SRB, drawn up pursuant to Article 20(10) of Regulation No 806/2014. The purpose of valuation 2 was to estimate the value of Banco Popular’s assets and liabilities, to provide an evaluation of the treatment that shareholders and creditors would have received if Banco Popular had entered into normal insolvency proceedings, and to inform the decision to be taken on the shares and instruments of ownership to be transferred and the SRB’s understanding of what constitutes commercial terms for the purposes of the sale of business tool. That valuation, inter alia, estimated the economic value of Banco Popular at EUR 1.3 billion in the best-case scenario, at minus EUR 8.2 billion in the worst-case scenario and at minus EUR 2 billion for the best estimate.

66 On 7 June 2017, Banco Santander submitted a concrete bid.

67 By letter of 7 June 2017, the FROB informed the SRB that Banco Santander had submitted a bid at 3.12 a.m. on 7 June and that the price offered by Banco Santander for the sale of Banco Popular shares was one euro. The FROB stated that its governing committee had selected Banco Santander as awardee of the competitive sale process of Banco Popular and had decided to propose to the SRB to designate Banco Santander as buyer in the SRB’s decision on the adoption of a resolution scheme in respect of Banco Popular.

C. The resolution scheme for Banco Popular of 7 June 2017

68 On 7 June 2017, the Executive Session of the SRB adopted Decision SRB/EES/2017/08 concerning a resolution scheme in respect of Banco Popular (‘the resolution scheme’) on the basis of Regulation No 806/2014.

69 According to Article 1 of the resolution scheme, given that the conditions provided for in Article 18(1) of Regulation No 806/2014 had been met, the SRB decided to place Banco Popular under resolution as of the resolution date.

70 Accordingly, the SRB considered, first, that Banco Popular was failing or was likely to fail, second, that there were no alternative measures that could prevent the failure of Banco Popular within a reasonable time frame and, third, that resolution action in the form of a sale of business tool in respect of Banco Popular was necessary in the public interest. In that regard, the SRB stated that the resolution was a necessary and proportionate way to meet the two objectives referred to in Article 14(2) of Regulation No 806/2014, namely to achieve the continuity of the bank’s critical functions and to avoid significant adverse effects on financial stability.

71 In Article 5.1 of the resolution scheme, the SRB decided the following:

‘The resolution tool to be applied to [Banco Popular] shall consist in the sale of business pursuant to Article 24 of [Regulation No 806/2014] for transferring shares to a purchaser. The write-down and conversion of capital instruments will be exercised immediately before the application of the sale of business tool.’

72 Article 6 of the resolution scheme concerns the write-down of capital instruments and the sale of business tool. In Article 6.1, the SRB set out the measures which it had adopted pursuant to its write-down power provided for in Article 21 of Regulation No 806/2014.

73 Accordingly, in Article 6.1 of the resolution scheme, the SRB decided:

– first, to write down the nominal amount of Banco Popular’s share capital in an amount of EUR 2 098 429 046, resulting in the cancellation of 100% of Banco Popular’s share capital;

– subsequently, to convert all the principal amount of the additional Tier 1 instruments issued by Banco Popular and outstanding as at the date of the decision relating to the resolution scheme into newly issued shares of Banco Popular (‘the New Shares I’);

– subsequently, to write down to zero the nominal amount of the ‘New Shares I’, resulting in the cancellation of 100% of those ‘New Shares I’;

– lastly, to convert all the principal amount of the Tier 2 capital instruments issued by Banco Popular and outstanding as at the date of the resolution decision into newly issued shares of Banco Popular (‘the New Shares II’).

74 Article 6.3 of the resolution scheme provides that those write-down and conversion measures are based on valuation 2, as corroborated by the results of an open and transparent marketing process conducted by the Spanish resolution authority, the FROB.

75 In Article 6.5 of the resolution scheme, the SRB stated that it was exercising the powers conferred on it by Article 24(1)(a) of Regulation No 806/2014 concerning the sale of business tool, and ordered that the ‘New Shares II’ be transferred to Banco Santander free and clear of any rights or liens of any third party, in consideration of a purchase price of one euro. It was specified that the purchaser had already consented to the transfer.

76 The SRB also stated that the transfer of the ‘New Shares II’ should be made on the basis of the purchaser’s binding offer of 7 June 2017 and implemented by the FROB under Ley 11/2015 de recuperación y resolución de entidades de crédito y empresas de servicios de inversión (Law 11/2015 on the recovery and resolution of credit institutions and investment firms) of 18 June 2015 (BOE No 146 of 19 June 2015, p. 50797, ‘Law 11/2015’).

77 The resolution scheme was submitted to the Commission for endorsement at 5.13 a.m. on 7 June 2017.

78 On 7 June 2017, at 6.30 a.m., the Commission adopted Decision (EU) 2017/1246 endorsing the resolution scheme for [Banco Popular] (OJ 2017 L 178, p. 15) and notified it to the SRB. Consequently, the resolution scheme entered into force on the same day.

79 Recital 4 of Decision 2017/1246 states the following:

‘The Commission agrees with the resolution scheme. In particular, it agrees with the reasons provided by the SRB of why resolution is necessary in the public interest in accordance with Article 5 of Regulation (EU) No 806/2014.’

80 On the same day, the FROB adopted the necessary measures to implement the resolution scheme in accordance with Article 29 of Regulation No 806/2014. In that context, the FROB approved the transfer of Banco Popular’s new shares resulting from the conversion of the Tier 2 instruments (‘the New Shares II’) to Banco Santander.

D. Facts subsequent to the adoption of the resolution decision

81 On 14 June 2018, Deloitte sent to the SRB the valuation of difference in treatment, provided for in Article 20(16) to (18) of Regulation No 806/2014, carried out in order to determine whether the shareholders and creditors would have received better treatment if Banco Popular had entered into normal insolvency proceedings (‘valuation 3’). On 31 July 2018, Deloitte sent to the SRB an addendum to that valuation, correcting some formal errors.

82 On 28 September 2018, following a merger by acquisition, Banco Santander became the universal successor of Banco Popular.

83 On 17 March 2020, the SRB adopted decision SRB/EES/2020/52 determining whether compensation needed to be granted to the shareholders and creditors in respect of which the resolution actions concerning Banco Popular had been effected. A communication concerning that decision was published on 20 March 2020 in the Official Journal of the European Union (OJ 2020 C 91, p. 2). In that decision, the SRB considered that the shareholders and creditors who were affected by the resolution of Banco Popular were not entitled to compensation from the SRF under Article 76(1)(e) of Regulation No 806/2014.

III. Procedure and forms of order sought

84 By application lodged at the Registry of the General Court on 18 September 2017, the applicant brought the present action.

85 By document lodged at the Registry on 15 November 2017, the SRB requested the Court, pursuant to Article 92(3) of the Rules of Procedure of the General Court, to order measures of inquiry concerning the production of certain documents referred to in the annex. By decision of 30 November 2017, the Court decided not to grant that request for a measure of inquiry at that stage in the proceedings.

86 By documents lodged at the Registry of the General Court on 6 and 30 November 2017, and on 5 and 13 December 2017, respectively, Banco Santander, the Council, the Kingdom of Spain and the European Parliament applied for leave to intervene in the present proceedings in support of the form of order sought by the Commission and the SRB. By decisions of 6 August 2018, the President of the Eighth Chamber of the General Court granted the Kingdom of Spain, the Parliament and the Council leave to intervene and, by order of 12 April 2019, granted Banco Santander leave to intervene. The Kingdom of Spain, the Parliament, the Council and Banco Santander submitted their statements in intervention, and the applicant and the SRB submitted their observations on those statements within the prescribed time limits.

87 On 16 February 2018, in the context of measures of organisation of procedure provided for in Article 89 of the Rules of Procedure, the Court requested the SRB to lodge the latest, non-confidential version of the resolution scheme, as well as a non-confidential version of valuation 2, which were published on the SRB’s website. The SRB lodged the documents within the prescribed time limit.

88 On 6 July 2018, in the context of measures of organisation of procedure provided for in Article 89 of the Rules of Procedure, the Court put written questions to the main parties. The main parties complied with that request within the prescribed time limit.

89 Following a change in the composition of the Chambers of the General Court, in accordance with Article 27(5) of the Rules of Procedure, the Judge-Rapporteur was assigned to the Third Chamber, to which the present case was, accordingly, allocated.

90 By letter lodged at the Registry of the General Court on 21 January 2020, the applicant introduced a new plea in law pursuant to Article 84 of the Rules of Procedure. The Commission, the SRB, the Kingdom of Spain, the Parliament, the Council and Banco Santander lodged their observations within the prescribed time limits.

91 Acting on a proposal from the Third Chamber, the Court decided, pursuant to Article 28 of the Rules of Procedure, to refer the case to a Chamber sitting in extended composition.

92 By letter lodged at the Registry of the General Court on 2 October 2020, the applicant produced a new offer of evidence pursuant to Article 85(3) of the Rules of Procedure. The Commission, the SRB, the Kingdom of Spain, the Parliament, the Council and Banco Santander lodged their observations within the prescribed time limit.

93 On 16 March 2021, the Court, in the context of measures of organisation of procedure provided for in Article 89 of the Rules of Procedure, requested the SRB to produce various documents. By letter of 30 March 2021, the SRB replied that the requested documents were in part confidential and that they could be produced if the Court adopted a measure of inquiry.

94 By letter lodged at the Registry of the General Court on 19 April 2021, the applicant filed a new offer of evidence and an application for measures of organisation of procedure. The Commission, the SRB, the Parliament, the Council and Banco Santander lodged their observations within the prescribed time limit.

95 By order of 12 May 2021, the Court ordered the SRB, on the basis, first, of the first paragraph of Article 24 of the Statute of the Court of Justice of the European Union and, second, of Article 91(b), Article 92(3) and Article 103 of the Rules of Procedure, to produce the full versions of the resolution scheme, valuation 2, the ECB’s assessment of 6 June 2017 that Banco Popular was failing or was likely to fail, Banco Popular’s letter of 6 June 2017 to the ECB, including the annex to that letter, and the ECB’s letter of 18 May 2017 to Banco Popular. The Court also ordered the SRB to produce non-confidential versions of Banco Popular’s letter of 6 June 2017 to the ECB, including the annex to that letter, and of the ECB’s letter of 18 May 2017 to Banco Popular.

96 By letter lodged at the Registry of the General Court on 17 May 2021, the applicant submitted an application for measures of organisation of procedure. The Commission, the SRB, the Kingdom of Spain, the Parliament, the Council and Banco Santander lodged their observations within the prescribed time limit.

97 By order of 9 June 2021, the Court removed from the file the confidential versions of the documents produced by the SRB pursuant to the order of 12 May 2021, and sent to the applicant, the Commission, the Kingdom of Spain, the Parliament, the Council and Banco Santander the letter of 6 June 2017 from Banco Popular to the ECB without the annex to that letter.

98 Since two members of the Third Chamber, Extended Composition were unable to sit, the President of the General Court designated two other Judges to complete the Chamber.

99 The parties presented oral argument and answered oral questions put to them by the Court at the hearing on 17 June 2021.

100 By document lodged at the Registry of the General Court on 30 July 2021, the applicant submitted a request that the oral part of the procedure be reopened under Article 113(2)(c) of the Rules of Procedure. By decision of 27 August 2021, the President of the Third Chamber (Extended Composition) of the Court rejected that request as, since none of the conditions laid down in Article 113(2) of the Rules of Procedure had been satisfied in the present case, the evidence on which the applicant based its request that the oral part of the procedure be reopened was not capable of having a decisive influence on the Court’s decision.

101 The applicant claims that the Court should:

– annul the resolution scheme and Decision 2017/1246 (together, ‘the contested decisions’);

– order the SRB to pay the costs.

102 The Commission and the SRB contend that the Court should:

– dismiss the action;

– order the applicant to pay the costs.

103 The Kingdom of Spain, the Council and Banco Santander contend that the Court should:

– dismiss the action;

– order the applicant to pay the costs.

104 The Parliament contends that the Court should:

– dismiss the action in so far as it is based on the pleas of illegality raised against Regulation No 806/2014;

– order the applicant to pay the costs.

IV. Law

A. The new offer of evidence of 19 April 2021

105 By document lodged at the Court on 19 April 2021, the applicant submitted a new offer of evidence on the basis of Article 85(3) of the Rules of Procedure. That evidence concerns a request for access to documents sent by the applicant to the SRB on 4 May 2018 seeking the ex post definitive valuation of Banco Popular and the SRB’s reply of 19 June 2018.

106 The Commission, the SRB and Banco Santander submit that those documents are not relevant to the present dispute.

107 Under Article 85(3) of the Rules of Procedure, the main parties may, exceptionally, produce or offer further evidence before the oral part of the procedure is closed, provided that the delay in the submission of such evidence is justified.

108 According to settled case-law, the legality of an EU measure must be assessed on the basis of the facts and the law as they stood at the time when the measure was adopted (see judgment of 3 September 2015, Inuit Tapiriit Kanatami and Others v Commission, C‑398/13 P, EU:C:2015:535, paragraph 22 and the case-law cited). It follows that elements post-dating the adoption of the EU measure cannot be taken into account in assessing the legality of that measure (see judgment of 17 December 2014, Si.mobil v Commission, T‑201/11, EU:T:2014:1096, paragraph 64 and the case-law cited).

109 It is sufficient to note that the new offer of evidence submitted by the applicant concerns an email exchange between itself and the SRB concerning a request for access to documents, dating from May and June 2018. Therefore, those documents are not capable of calling into question the legality of the contested decisions since they largely post-date the adoption of those decisions.

110 Moreover, the applicant does not explain what information contained in that exchange of emails would be relevant to the resolution of the dispute and does not identify which argument raised in the application or the reply that exchange is supposed to support.

111 It must therefore be held that the new offer of evidence submitted by the applicant on 19 April 2021 is irrelevant for the purposes of assessing the legality of the contested decisions, without it being necessary to examine whether the applicant has justified the late submission of those documents which, given their date, were already available to it before the reply was lodged.

B. Substance

112 In support of its action, the applicant raises 10 pleas in law in the application. The first plea alleges breach of the duty to state reasons and infringement of the rights of the defence, enshrined in Articles 15 and 296 TFEU and Articles 42 and 47 of the Charter of Fundamental Rights of the European Union (‘the Charter’). The second plea alleges breach of the principle nemo auditur propriam turpitudinem allegans and of Article 88 of Regulation No 806/2014. The third plea alleges that Articles 21 and 24 of Regulation No 806/2014 are unlawful in so far as they breach the principles relating to the delegation of powers. The fourth plea alleges that Articles 15 and 22 of Regulation No 806/2014 are unlawful in so far as they infringe the right to property enshrined in Article 17 of the Charter and breach the principle of proportionality laid down in Article 5(4) TEU. The fifth plea alleges that Articles 18 and 20 of Regulation No 806/2014 are unlawful in so far as they infringe the right to be heard, enshrined in Articles 17 and 41 of the Charter. The sixth plea alleges infringement of the right to property, enshrined in Article 17 of the Charter and infringement of Article 5(4) TEU. The seventh plea alleges infringement of the right to be heard, enshrined in Articles 17 and 41 of the Charter. The eighth plea alleges infringement of Article 18 of Regulation No 806/2014, breach of the duty of care and infringement of Article 296 TFEU. The ninth plea alleges infringement of Articles 14 and 20 of Regulation No 806/2014, breach of the duty of care and infringement of Article 296 TFEU. The 10th plea alleges infringement of Article 14 of Regulation No 806/2014, breach of the duty of care and infringement of Article 296 TFEU.

113 In the reply, the applicant raises two new pleas in law. The 11th plea alleges infringement of Article 20(14) of Regulation No 806/2014, read in conjunction with Article 20(11) and (15) of that regulation, and infringement of essential procedural requirements. The 12th plea alleges infringement of Article 20(1) of Regulation No 806/2014, read in conjunction with Article 20(3) and (5) of that regulation.

114 As a preliminary point, it must be noted that the case-law has defined the scope of the review carried out by the Court both in situations in which the contested act is based on an assessment of highly complex scientific and technical facts and where there are complex economic assessments.

115 First, with regard to situations in which the EU authorities have a broad discretion, in particular as to the assessment of highly complex scientific and technical facts in order to determine the nature and scope of the measures which they adopt, review by the EU judicature is limited to verifying whether there has been a manifest error of assessment or a misuse of powers, or whether those authorities have manifestly exceeded the limits of their discretion. In such a context, the EU judicature cannot substitute its assessment of scientific and technical facts for that of the EU authorities on which alone the FEU Treaty has placed that task (judgments of 21 July 2011, Etimine, C‑15/10, EU:C:2011:504, paragraph 60, and of 7 March 2013, Bilbaína de Alquitranes and Others v ECHA, T‑93/10, EU:T:2013:106, paragraph 76; see, also, judgment of 11 May 2017, Deza v ECHA, T‑115/15, EU:T:2017:329, paragraph 163 and the case-law cited).

116 Second, as regards the review by the EU Courts of the complex economic assessments made by the EU authorities, that review is necessarily limited and confined to verifying whether the rules on procedure and on the statement of reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of assessment or a misuse of powers. When conducting such a review, the EU Courts must also not substitute their own economic assessment for that of the competent EU authority (see, to that effect, judgments of 11 July 1985, Remia and Others v Commission, 42/84, EU:C:1985:327, paragraph 34; of 10 December 2020, Comune di Milano v Commission, C‑160/19 P, EU:C:2020:1012, paragraph 100 and the case-law cited; and of 16 January 2020, Iberpotash v Commission, T‑257/18, EU:T:2020:1, paragraph 96 and the case-law cited).

117 Since the decisions which the SRB is required to adopt in the context of a resolution procedure are based on highly complex economic and technical assessments, it must be held that the principles resulting from the case-law referred to in paragraphs 115 and 116 above apply to the review which the court is called upon to carry out.

118 However, although the SRB has discretion with regard to economic and technical matters, that does not mean that the EU Courts must refrain from reviewing the SRB’s interpretation of information of an economic nature which forms the basis of its decision. As the Court of Justice has held, even in the case of complex assessments, the EU judicature must not only establish whether the evidence relied on is factually accurate, reliable and consistent but also ascertain whether that evidence contains all the information which must be taken into account in order to assess a complex situation and whether it is capable of supporting the conclusions drawn from it (see judgments of 22 November 2007, Spain v Lenzing, C‑525/04 P, EU:C:2007:698, paragraph 57 and the case-law cited; of 26 March 2019, Commission v Italy, C‑621/16 P, EU:C:2019:251, paragraph 104 and the case-law cited; and of 10 December 2020, Comune di Milano v Commission, C‑160/19 P, EU:C:2020:1012, paragraph 115 and the case-law cited).

119 In that regard, in order to establish that the SRB committed a manifest error in assessing facts so as to justify the annulment of the resolution scheme, the evidence adduced by the applicants must be sufficient to render the factual assessments adopted in that scheme implausible (see, by analogy, judgments of 14 June 2018, Lubrizol France v Council, C‑223/17 P, not published, EU:C:2018:442, paragraph 39; of 12 December 1996, AIUFFASS and AKT v Commission, T‑380/94, EU:T:1996:195, paragraph 59; and of 13 December 2018, Comune di Milano v Commission, T‑167/13, EU:T:2018:940, paragraph 108 and the case-law cited).

120 The Court considers it appropriate to examine, first of all, the pleas of illegality raised in the third, fourth and fifth pleas in law, then the eighth plea in law and, lastly, the other pleas in law.

1. The third plea in law, alleging that Articles 21 and 24 of Regulation No 806/2014 are unlawful in so far as they infringe the principles relating to the delegation of powers

121 The applicant submits that Articles 21 and 24 of Regulation No 806/2014 infringe the principles established by the judgments of 13 June 1958, Meroni v High Authority (9/56, EU:C:1958:7), and of 22 January 2014, United Kingdom v Parliament and Council (C‑270/12, EU:C:2014:18) concerning the delegation of powers by the institutions. It states that the delegation to the SRB of the power to write down and convert capital instruments, provided for in Article 21 of Regulation No 806/2014 and the power to sell business, provided for in Article 24 of the same regulation, does not comply with the three conditions laid down in those judgments, namely the objectives have not been established precisely, the circumstances and conditions under which those powers may be exercised are not defined and compliance with the principle of proportionality is not ensured.

122 The Commission, the Parliament and the Council submit, in essence, that the EU legislature has not delegated discretionary powers to the SRB, since the SRB’s resolution scheme produces binding legal effects only if it is endorsed by the Commission or the Council. The powers provided for in Articles 21 and 24 of Regulation No 806/2014 required the Commission’s approval in accordance with the judgment of 13 June 1958, Meroni v High Authority, (9/56, EU:C:1958:7). Since the power to decide on matters involving discretionary assessments is reserved to the Commission or to the Council, those institutions thus assume legal and political responsibility for determining the European Union’s resolution policy.

123 It should be noted that the Treaties do not contain any provision providing for the conferral of powers on an EU body, office or agency. Thus, no mention is made of agencies in either Article 290 TFEU, which provides for delegation of rule-making in legislative acts to the Commission, or Article 291 TFEU which confers implementing powers on the Member States, the Commission, and in some limited circumstances the Council (Opinion of Advocate General Jääskinen in United Kingdom v Parliament and Council, C‑270/12, EU:C:2013:562, point 75).

124 It is therefore the case-law, and in particular the judgment of 13 June 1958, Meroni v High Authority (9/56, EU:C:1958:7), which laid down the principles governing the delegation of powers. Next, the judgment of 22 January 2014, United Kingdom v Parliament and Council (C‑270/12, EU:C:2014:18), applied those principles to cases where autonomous powers have been conferred on an agency by the EU legislature.

125 In paragraph 41 of the judgment of 22 January 2014, United Kingdom v Parliament and Council (C‑270/12, EU:C:2014:18), the Court of Justice stated that, in the judgment of 13 June 1958, Meroni v High Authority (9/56, EU:C:1958:7), it had emphasised, in essence, that the consequences resulting from a delegation of powers were very different depending on whether it involved clearly defined executive powers the exercise of which could, therefore, be subject to strict review in the light of objective criteria determined by the delegating authority, or whether it involved a ‘discretionary power implying a wide margin of discretion which [could], according to the use which [was] made of it, make possible the execution of actual economic policy’.

126 The Court of Justice added that it had also stated in the judgment of 13 June 1958, Meroni v High Authority (9/56, EU:C:1958:7) that a delegation of the first kind could not appreciably alter the consequences involved in the exercise of the powers concerned, whereas a delegation of the second kind, since it replaced the choices of the delegator by the choices of the delegate, brought about an ‘actual transfer of responsibility’ (judgment of 22 January 2014, United Kingdom v Parliament and Council, C‑270/12, EU:C:2014:18, paragraph 42).

127 As a preliminary point, it must be noted that the procedure for adopting resolution actions established by the legislature in Regulation No 806/2014 followed the observations made by the Council Legal Service in an opinion of 7 October 2013 on the Commission’s proposal for a regulation, which sought to assess the compatibility of the procedure initially laid down in the proposal for a regulation with the principles governing the delegation of powers, as interpreted in the judgment of 13 June 1958, Meroni v High Authority (9/56, EU:C:1958:7).

128 Originally, in the proposal for a regulation examined in that opinion, the division of powers between the Commission and the SRB differed from that ultimately adopted in Regulation No 806/2014. In particular, the Commission had the power to place an entity under resolution, to establish a framework for the use of resolution tools and to decide whether and how the powers to write down or convert capital instruments were to be used, and the SRB, in accordance with the framework established by the Commission, was competent to adopt decisions addressed to the national resolution authorities.

129 In its opinion, the Council Legal Service stated that certain measures which the SRB could include in a resolution decision were not defined with sufficient precision. The Council Legal Service considered that the general economy and structure of the proposal for a regulation, whereby the Commission would be endowed with the power to adopt the basic resolution decisions and the SRB would be held to act within the criteria laid down by the Commission itself, is in conformity with EU law as interpreted in the judgment of 13 June 1958, Meroni v High Authority (9/56, EU:C:1958:7). However, it considered that the powers of the SRB to implement resolution tools and decisions seem at certain instances to be of a rather discretionary nature, thus going beyond the exercise of purely technical powers. Therefore, it concluded that it would be necessary either to include in the regulation further specifications in order properly to frame the application by the SRB of resolution tools or to involve in the exercise of those powers an EU institution vested with executive competences.

130 The EU legislature, taking that opinion from the Council Legal Service into consideration, amended the mechanism for adopting resolution actions. Given that the adoption of a resolution action involves a margin of discretion, the legislature reserved that power to an institution and not to the SRB.

131 That is apparent, in particular, from recitals 24 and 26 of Regulation No 806/2014 which state:

‘(24) Since only institutions of the Union may establish the resolution policy of the Union and since a margin of discretion remains in the adoption of each specific resolution scheme, it is necessary to provide for the adequate involvement of the Council and the Commission, as institutions which may exercise implementing powers, in accordance with Article 291 TFEU. The assessment of the discretionary aspects of the resolution decisions taken by the [SRB] should be exercised by the Commission. Given the considerable impact of the resolution decisions on the financial stability of Member States and on the Union as such, as well as on the fiscal sovereignty of Member States, it is important that implementing power to take certain decisions relating to resolution be conferred on the Council. It should therefore be for the Council, on a proposal from the Commission, to exercise effective control on the assessment by the [SRB] of the existence of a public interest and to assess any material change to the amount of the [SRF] to be used in a specific resolution action. …

(26) … The [SRB], if it considers all the criteria relating to the triggering of resolutions to be met, should adopt the resolution scheme. The procedure relating to the adoption of the resolution scheme, which involves the Commission and the Council, strengthens the necessary operational independence of the [SRB] while respecting the principle of delegation of powers to agencies as interpreted by the Court of Justice of the European Union … Therefore, this Regulation provides that the resolution scheme adopted by the [SRB] enters into force only if, within 24 hours after its adoption by the [SRB], there are no objections from the Council or the Commission or the resolution scheme is approved by the Commission. The grounds on which the Council is permitted to object, on a proposal by the Commission, to the [SRB’s] resolution scheme should be strictly limited to the existence of a public interest and to material modifications by the Commission of the amount of the use of the [SRF] as proposed by the [SRB]. … As an observer to the meetings of the [SRB], the Commission should, on an ongoing basis, check that the resolution scheme adopted by the [SRB] complies fully with this Regulation, balances appropriately the different objectives and interests at stake, respects the public interest and that the integrity of the internal market is preserved. Considering that the resolution action requires a very speedy decision-making process, the Council and the Commission should cooperate closely and the Council should not duplicate the preparatory work already undertaken by the Commission. …’

132 Thus, as regards the resolution procedure, Article 18(7) of Regulation No 806/2014 provides that the Commission is either to endorse the resolution scheme or object to it with regard to the discretionary aspects of the scheme and that a resolution scheme may enter into force only if no objection has been expressed by the Council or by the Commission within a period of 24 hours after its transmission by the SRB.

133 Therefore, under Article 18(7) of Regulation No 806/2014, it is necessary for an EU institution, namely the Commission or the Council, to endorse the resolution scheme with regard to its discretionary aspects in order for the scheme to produce legal effects. The EU legislature thus conferred on an institution the legal and political responsibility for determining the European Union’s resolution policy, thereby avoiding an ‘actual transfer of responsibility’ within the meaning of the judgment of 13 June 1958, Meroni v High Authority (9/56, EU:C:1958:7).

134 As the Commission, the Parliament and the Council submit, the EU legislature, by establishing the procedure for the adoption of a resolution action provided for in Regulation No 806/2014 and by expressly reserving the decision on the discretionary aspects of such an action to the EU institutions, did not delegate autonomous power to the SRB.

135 In the light of those considerations, it is necessary to examine the powers conferred on the SRB by Article 21 of Regulation No 806/2014 relating to the power to write down or convert capital instruments and by Article 24 of that regulation relating to the sale of business tool, referred to in the plea of illegality raised by the applicant.

136 First of all, it should be noted that the choice of the sale of business tool and the exercise of the power to write down and convert capital instruments in the context of a resolution action presuppose that the conditions for the adoption of a resolution scheme referred to in Article 18(1) of Regulation No 806/2014 are satisfied. In particular, they imply that the resolution action is necessary in the public interest within the meaning of Article 18(1)(c) of Regulation No 806/2014.

137 Under the third subparagraph of Article 18(7) of Regulation No 806/2014, the Commission, after the transmission of the resolution scheme by the SRB, may propose to the Council to object to the resolution scheme on the ground that the resolution scheme adopted by the SRB does not fulfil the criterion of public interest referred to in paragraph 1(c) of that article.

138 Compliance with the condition laid down in Article 18(1)(c) of Regulation No 806/2014 is a prerequisite for the decision to place an institution under a resolution procedure, and the review of the need for the action in the light of the public interest entails the exercise of a discretionary power involving a broad discretion. For that reason, the EU legislature expressly conferred on the Commission, and where necessary on the Council, and not on the SRB, the power to monitor compliance with that condition.

139 Under Article 18(5) of Regulation No 806/2014, ‘for the purposes of point (c) of paragraph 1 of this Article, a resolution action shall be treated as in the public interest if it is necessary for the achievement of, and is proportionate to one or more of the resolution objectives referred to in Article 14 and winding up of the entity under normal insolvency proceedings would not meet those resolution objectives to the same extent’.

140 Article 14(1) of Regulation No 806/2014 states:

‘When acting under the resolution procedure referred to in Article 18, the [SRB], the Council, the Commission, and, where relevant, the national resolution authorities, in respect of their respective responsibilities, shall take into account the resolution objectives, and choose the resolution tools and resolution powers which, in their view, best achieve the resolution objectives that are relevant in the circumstances of the case’.

141 It follows that it is for the Commission, when assessing compliance with the public interest criterion, to assess whether the choice of the resolution tool and whether the exercise of the power to write down and convert capital instruments are appropriate and proportionate to the objectives of the resolution. It also follows that the Commission must assess whether the resolution scheme envisaged by the SRB is adapted to the specific circumstances of the entity concerned, having regard in particular to the reasons why that entity was considered to be failing or likely to fail.

142 Therefore, first, it must be held that the choice of the sale of business tool provided for in Article 24 of Regulation No 806/2014 as a resolution tool contributes to the proportionality of the action in the light of the public interest criterion and that Regulation No 806/2014 expressly provides that it is for the Commission either to endorse the action or raise objections. It must therefore be considered that that article does not confer any discretion on the SRB.

143 Secondly, with regard to the exercise of the power to write down or convert relevant capital instruments provided for in Article 21 of Regulation No 806/2014, it should be noted that that article makes numerous references to the procedure in Article 18 of the same regulation, in particular in Article 21(9) which provides that ‘where one or more of the conditions referred to in paragraph 1 are met, and the conditions referred to in Article 18(1) are also met, the procedure laid down in Article 18(6), (7) and (8) shall apply’. Accordingly, the decision to write down and convert the entity concerned’s capital instruments is subject to the procedure for adopting the resolution scheme in Article 18 of Regulation No 806/2014 and, in particular, the Commission’s approval.

144 Furthermore, the power to write down and convert capital instruments forms part of the resolution powers referred to in Article 14(1) of Regulation No 806/2014, the use of which must be proportionate to the resolution objectives and which fall within the scope of the Commission’s assessment of compliance with the public interest criterion. It must therefore be held that Article 21 of Regulation No 806/2014 does not confer any discretionary power on the SRB.

145 Moreover, it should be borne in mind that the choice of the sale of business tool and the exercise of the power to write down and convert capital instruments, as essential elements of the resolution scheme, produce legal effects only if an EU institution, namely the Commission or the Council, has endorsed them.

146 Accordingly, it must be held that Articles 21 and 24 of Regulation No 806/2014 do not contain a delegation of autonomous powers to the SRB in accordance with the judgment of 13 June 1958, Meroni v High Authority (9/56, EU:C:1958:7).

147 By its arguments, the applicant submits, in essence, that the delegation of powers conferred on the SRB by Articles 21 and 24 of Regulation No 806/2014 does not comply with the conditions laid down in the judgment of 22 January 2014, United Kingdom v Parliament and Council (C‑270/12, EU:C:2014:18), mentioned in paragraph 121 above.

148 In so far as it has been found that Articles 21 and 24 of Regulation No 806/2014 did not lead to a delegation of powers to the SRB, the conditions laid down by the Court of Justice in the judgment of 22 January 2014, United Kingdom v Parliament and Council (C‑270/12, EU:C:2014:18), aimed at assessing whether a delegation of autonomous powers conferred on an agency was consistent with the principles laid down in the judgment of 13 June 1958, Meroni v High Authority (9/56, EU:C:1958:7), are therefore not applicable in the present case. Accordingly, the arguments raised by the applicant which seek to establish that the conditions laid down in that judgment were not satisfied are irrelevant.

149 It follows from all of the foregoing that the plea of illegality in respect of Articles 21 and 24 of Regulation No 806/2014 must be rejected.

2. The fourth plea in law, alleging that Articles 15 and 22 of Regulation No 806/2014 are unlawful in so far as they infringe the right to property enshrined in Article 17 of the Charter and the principle of proportionality laid down in Article 5(4) TEU

150 The applicant raises a plea of illegality in respect of Articles 15 and 22 of Regulation No 806/2014 on the basis of Article 277 TFEU. It claims, in essence, that those provisions, in so far as they require shareholders to bear first losses in all circumstances, infringe, first, the right to property guaranteed by Article 17 of the Charter, without that restriction being regarded as justified in accordance with Article 52(1) of the Charter and, secondly, the principle of proportionality guaranteed by Article 5(4) TEU.

151 The applicant submits that Articles 15 and 22 of Regulation No 806/2014 restrict shareholders’ right to property since they are required to bear the losses arising from the resolution. Those articles are said to prevent less restrictive solutions from being sought and therefore do not satisfy the conditions laid down in Article 52(1) of the Charter. In that regard, it submits that it is not possible to establish a general presumption that there is a public interest in the losses being borne primarily by the shareholders, without the possibility of examining other measures. The applicant considers that the public authority should be able to assess the public interest in not using public funds or in not using the SRF on a case-by-case basis, having regard to the public finance position, the market situation, the economic context and the solvency of the institution.

152 The applicant also claims that Articles 15 and 22 of Regulation No 806/2014 infringe the principle of proportionality guaranteed by Article 5(4) TEU since the SRB should be able to ascertain on a case-by-case basis whether there is a public interest in losses being borne by the shareholders or whether the right to property must prevail depending on the circumstances of each individual case. Those articles are also said to discriminate between different categories of creditors, in particular in the light of Article 27(3) of Regulation No 806/2014.

153 As a preliminary point, it should be recalled that the provisions the legality of which the applicant challenges contain general principles governing resolution or resolution tools.

154 Article 15(1) of Regulation No 806/2014 provides:

‘When acting under the resolution procedure referred to in Article 18, the [SRB], the Council, the Commission and, where relevant, the national resolution authorities, shall take all appropriate measures to ensure that the resolution action is taken in accordance with the following principles:

(a) the shareholders of the institution under resolution bear first losses;

…’

155 Article 22(1) of Regulation No 806/2014 provides:

‘Where the [SRB] decides to apply a resolution tool to an entity or group referred to in Article 7(2) or to an entity or group referred to in Article 7(4)(b) and (5) where the conditions for the application of those paragraphs are met, and that resolution action would result in losses being borne by creditors or their claims being converted, the [SRB] shall instruct the national resolution authorities to exercise the power to write down and convert relevant capital instruments in accordance with Article 21 immediately before or together with the application of the resolution tool.’

156 It must be held that the write-down and conversion of capital instruments provided for in Article 22 of Regulation No 806/2014 are an application of the principle that shareholders are to bear first losses, provided for in Article 15 of that regulation.

157 Article 17(1) of the Charter provides:

‘Everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions. No one may be deprived of his or her possessions, except in the public interest and in the cases and under the conditions provided for by law, subject to fair compensation being paid in good time for their loss. The use of property may be regulated by law in so far as is necessary for the general interest.’

158 Article 52(1) of the Charter states:

‘Any limitation on the exercise of the rights and freedoms recognised by this Charter must be provided for by law and respect the essence of those rights and freedoms. Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others.’

159 It should be recalled that, according to settled case-law, the right to property guaranteed by Article 17(1) of the Charter is not absolute and its exercise may be subject to restrictions justified by objectives of general interest pursued by the European Union. Consequently, as is apparent from Article 52(1) of the Charter, restrictions may be imposed on the exercise of the right to property, provided that the restrictions genuinely meet objectives of general interest and do not constitute, in relation to the aim pursued, a disproportionate and intolerable interference, impairing the very substance of the right guaranteed (see judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB, C‑8/15 P to C‑10/15 P, EU:C:2016:701, paragraphs 69 and 70 and the case-law cited; judgments of 16 July 2020, Adusbef and Others, C‑686/18, EU:C:2020:567, paragraph 85; and of 23 May 2019, Steinhoff and Others v ECB, T‑107/17, EU:T:2019:353, paragraph 100).

160 It follows that the right to property is not an absolute right, but it may be subject to limitations if they are provided for in the applicable texts, are necessary for the pursuit of a general objective and are proportionate to that objective.

161 In the first place, it follows from the case-law that financial services play a central role in the economy of the European Union. Banks and credit institutions are an essential source of funding for businesses that are active in the various markets. In addition, banks are often interconnected and a number of them operate internationally. That is why the failure of one or more banks is liable to spread rapidly to other banks, either in the Member State concerned or in other Member States. That is likely, in turn, to produce negative spill-over effects in other sectors of the economy (judgments of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraph 50; of 20 September 2016, Ledra Advertising and Others v Commission and ECB, C‑8/15 P to C‑10/15 P, EU:C:2016:701, paragraph 72; and of 25 March 2021, Balgarska Narodna Banka, C‑501/18, EU:C:2021:249, paragraph 108).

162 According to the Court of Justice, the objective of ensuring the stability of the financial system while avoiding excessive public spending and minimising distortions of competition constitutes an overriding public interest (judgment of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraph 69).

163 The Court of Justice has already held that, in view of the objective of ensuring the stability of the banking system in the euro area, and having regard to the imminent risk of financial losses to which depositors with the banks concerned would have been exposed if the latter had failed, certain restrictions on the right to property could be justified (see, to that effect, judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB, C‑8/15 P to C‑10/15 P, EU:C:2016:701, paragraph 74).

164 The Court of Justice has also held that, although there is a clear public interest in ensuring throughout the European Union a strong and consistent protection of investors, that interest cannot be held to prevail in all circumstances over the public interest in ensuring the stability of the financial system (judgments of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraph 91, and of 8 November 2016, Dowling and Others, C‑41/15, EU:C:2016:836, paragraph 54).

165 In that regard, recital 61 of Regulation No 806/2014 provides that the limitations on the rights of shareholders and creditors should comply with Article 52 of the Charter and that the resolution tools should therefore be applied only to those entities that are failing or likely to fail, and only where necessary to pursue the objective of financial stability in the general interest.

166 It should be noted that Article 15(1) and Article 22(1) of Regulation No 806/2014 expressly provide that they are to be implemented in the context of a resolution action, which means that they meet the objectives of a resolution.

167 In that regard, Article 14(2) of Regulation No 806/2014 provides that the resolution objectives are the following: to ensure the continuity of critical functions, to avoid significant adverse effects on financial stability, in particular by preventing contagion, to protect public funds by minimising reliance on extraordinary public financial support, to protect depositors and to protect client funds and client assets.

168 Accordingly, it must be held that the objective pursued by a resolution action of ensuring the stability of the financial system is an objective of general interest which, in accordance with the case-law cited in paragraphs 162 to 164 above, may justify certain restrictions on the right to property. The limitations on the right to property of the shareholders to which Articles 15 and 22 of Regulation No 806/2014 may lead meet that same objective of general interest recognised by the European Union and are therefore capable of being justified, in accordance with the requirements of Article 52(1) of the Charter.

169 In the second place, it should be recalled that the application of Articles 15 and 22 of Regulation No 806/2014 presupposes that the conditions for the adoption of a resolution action are met.

170 As regards the conditions for the adoption of a resolution action, Article 18(1) of Regulation No 806/2014 provides that the entity covered by the resolution action must be failing or likely to fail, that there is no reasonable prospect that any alternative private sector or early intervention measures would prevent its failure within a reasonable time frame and that the action must be necessary in the public interest.

171 It should also be noted, as is apparent inter alia from Article 18(8) of Regulation No 806/2014, that a resolution action is an alternative solution to normal insolvency proceedings.

172 The Court of Justice has held, as regards the shareholders of the banks, that, in accordance with the general rules applicable to the status of shareholders of public limited liability companies, they must fully bear the risk of their investments (judgment of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraph 73).

173 The Court of Justice has held, in the field of State aid, that, since shareholders are liable for the debts of the bank up to the amount of its share capital, the fact that points 40 to 46 of the Communication from the Commission on the application, from 1 August 2013, of State aid rules to support measures in favour of banks in the context of the financial crisis (‘Banking Communication’) (OJ 2013 C 216, p. 1) require that, in order to overcome a bank’s capital shortfall, prior to the grant of State aid, those shareholders should contribute to the absorption of the losses suffered by that bank to the same extent as if there were no State aid, cannot be regarded as adversely affecting their right to property (judgment of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraph 74).

174 It must be held, by analogy, that, in the case of an entity which is the subject of a resolution action, the application of the principle that the shareholders are to bear first losses, provided for in Article 15 of Regulation No 806/2014, and the exercise of the power to write down and convert capital instruments, provided for in Article 22 of the same regulation, are the consequence of the fact that the shareholders of an entity must bear the risks inherent in their investments and of the fact that, since that entity is the subject of a resolution action because of its failure, those shareholders must bear the economic consequences of that failure.

175 The applicant puts forward a number of arguments to support its view that Articles 15 and 22 of Regulation No 806/2014 infringe the principle of proportionality in so far as they do not allow a case-by-case analysis or the examination of alternative solutions.

176 According to settled case‑law, the principle of proportionality, which is one of the general principles of EU law, requires that acts adopted by EU institutions do not exceed the limits of what is appropriate and necessary in order to attain the legitimate objectives pursued by the legislation in question; where 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 (see judgments of 30 April 2019, Italy v Council (Fishing quota for Mediterranean swordfish), C‑611/17, EU:C:2019:332, paragraph 55 and the case-law cited, and of 6 May 2021, Bayer CropScience and Bayer v Commission, C‑499/18 P, EU:C:2021:367, paragraph 166 and the case-law cited). That principle is stated in Article 5(4) TEU and in Article 1 of the Protocol on the application of the principles of subsidiarity and proportionality, annexed to the EU Treaty and the FEU Treaty.

177 First, the applicant submits that Articles 15 and 22 of Regulation No 806/2014 apply in all circumstances, without account being taken of the circumstances of each individual case.

178 It is true that Article 15 of Regulation No 806/2014 contains a principle which must guide any resolution action, in so far as shareholders must bear the risks associated with their investments. In that regard, it should be recalled that, in accordance with the case-law cited in paragraph 173 above, the contribution of shareholders to the bank’s losses cannot constitute an infringement of their right to property.

179 However, contrary to what the applicant appears to claim, the application of that principle does not automatically result in the exercise of the power to write down and convert capital instruments, provided for in Article 22 of Regulation No 806/2014, in every case where an entity is subject to a resolution action.

180 Thus, as regards the involvement of shareholders and creditors, Article 21 of Regulation No 806/2014 sets out the conditions under which the power to write down or convert capital instruments is exercised.

181 Moreover, it must be observed that Article 22 of Regulation No 806/2014 does not require the application of a specific resolution tool. It is for the SRB and the Commission to decide, on the basis of the circumstances of the case, which resolution tool is the most appropriate.

182 Secondly, the applicant submits that Articles 15 and 22 of Regulation No 806/2014 prevent less restrictive solutions from being sought, such as using the SRF, public funds or loans, depending on the circumstances. It must be held that that argument is based on a misunderstanding of the resolution mechanism.

183 First, in accordance with Article 18(1)(b) of Regulation No 806/2014, the adoption of a resolution action and, therefore, the exercise, in that context, of the power to write down and convert capital instruments presuppose the absence of an alternative private sector measure or supervisory action.

184 The less restrictive solutions envisaged by the applicant cannot therefore be regarded as alternative measures to the participation of shareholders and creditors in the context of a resolution action.

185 Moreover, the applicant appears to disregard the fact that the resolution action constitutes an alternative to a situation in which the entity is wound up under normal insolvency proceedings. If the difficulties faced by a bank could be resolved by means of loans, whether public or private, a resolution procedure could not be initiated in so far as the condition laid down in Article 18(1)(b) of Regulation No 806/2014 would not be met.

186 Secondly, it should be noted that the granting of State aid or aid from the SRF is not precluded in the context of a resolution action under Article 19 of Regulation No 806/2014. Thus, contrary to the applicant’s submissions, depending on the circumstances of the case, the SRB and the Commission may decide to authorise the use of public funds or of the SRF.

187 Thirdly, the applicant adds in the reply that Articles 15 and 22 of Regulation No 806/2014 do not allow for more flexible solutions, in particular in the event of a liquidity crisis, which is not the most serious problem a bank may face, such as loans from public authorities or liquidity assistance from the ECB.

188 By that argument, the applicant appears to criticise the legislature for not having envisaged in Article 22 of Regulation No 806/2014 any solution other than a resolution action in order to resolve difficulties which a bank may encounter. It is sufficient to note that that argument is ineffective since, if a bank is not in a position where it meets the conditions for being subject to a resolution action, it does not fall within the scope of Regulation No 806/2014.

189 In any event, contrary to the applicant’s submissions, a liquidity crisis is likely to lead a bank to a situation in which it is unable to pay its debts or other liabilities as they fall due, or in which there are objective elements to support a determination that that will occur in the near future, which is one of the situations, provided for in Article 18(4)(c) of Regulation No 806/2014, in which an entity will be deemed to be failing or likely to fail.

190 Fourthly, the applicant submits that Articles 15 and 22 of Regulation No 806/2014 also breach the principle of proportionality in that they discriminate between the different categories of creditors and unjustified preferential treatment is granted to deposit holders.

191 It should be recalled that the principle of equal treatment is a general principle of EU law, now enshrined in Articles 20 and 21 of the Charter, which requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified (judgments of 9 March 2017, Milkova, C‑406/15, EU:C:2017:198, paragraph 55; of 16 December 2020, Council and Others v K. Chrysostomides & Co. and Others, C‑597/18 P, C‑598/18 P, C‑603/18 P and C‑604/18 P, EU:C:2020:1028, paragraph 191; and of 3 June 2021, Hungary v Parliament, C‑650/18, EU:C:2021:426, paragraph 98).

192 In that regard, it is sufficient to note, first, that Article 15(1)(b) of Regulation No 806/2014 provides that ‘creditors of the institution under resolution bear losses after the shareholders in accordance with the order of priority of their claims pursuant to Article 17, save as expressly provided otherwise in this Regulation’. Article 15(1)(f) of Regulation No 806/2014 provides that creditors of the same class are to be treated in an equitable manner.

193 Moreover, Article 21(10) of Regulation No 806/2014 also states that ‘the [SRB] shall ensure that the national resolution authorities exercise the write-down or conversion powers without delay, in accordance with the priority of claims pursuant to Article 17’. That provision lays down an order of priority for claims and distinguishes in that regard between different categories of creditors, the holders of Common Equity Tier 1 items, the holders of Additional Tier 1 instruments and the holders of Tier 2 instruments.

194 Shareholders and creditors holding subordinated instruments, depending on whether they belong to one of those categories, are not in a comparable situation and may receive different treatment depending on the order of priority of their claims. Moreover, compliance with the principle of non-discrimination between creditors is guaranteed by Article 15(1)(f) of Regulation No 806/2014.

195 Secondly, the shareholders of a bank are not in a comparable situation to depositors. Unlike shareholders, depositors cannot be regarded as investors who must bear the economic risks of an investment in the bank’s share capital.

196 Moreover, the protection of depositors forms part of the resolution objectives under Article 14(2)(d) of Regulation No 806/2014 and is recalled in Article 15(1)(h) of the same regulation. Regulation No 806/2014 thus ensures that a resolution action complies with the principles laid down by 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).

197 It follows from the foregoing that the applicant has not established that Articles 15 and 22 of Regulation No 806/2014 led to a disproportionate restriction of the right to property.

198 Moreover, contrary to the applicant’s submissions, account must be taken of the fact that Regulation No 806/2014 provided for a mechanism intended to ensure that interference with shareholders’ right to property which may arise from the resolution action is not disproportionate.

199 In that regard, recital 62 of Regulation No 806/2014 provides that interference with property rights should not be disproportionate and that affected shareholders and creditors should not incur greater losses than those which they would have incurred had the entity been wound up at the time that the resolution decision is taken.

200 Among the general principles governing resolution, Article 15(1)(g) of Regulation No 806/2014 establishes the no creditor worse off principle, namely:

‘no creditor shall incur greater losses than would have been incurred if an entity referred to in Article 2 had been wound up under normal insolvency proceedings in accordance with the safeguards provided for in Article 29.’

201 In order to determine whether the shareholders and the creditors would have received better treatment if the entity concerned had entered into normal insolvency proceedings, Article 20(16) of Regulation No 806/2014 provides that a valuation is to be carried out after the resolution. According to Article 20(17) of Regulation No 806/2014, that valuation establishes whether there is a difference between the treatment which the shareholders and creditors would have received if the institution had entered into normal insolvency proceedings at the time when the decision on the resolution action was taken and the actual treatment that they received in the resolution.

202 If, following that valuation, it is established that the shareholders or creditors suffered greater losses in the resolution than the losses they would have incurred during a winding-up under normal insolvency proceedings, Article 76(1) of Regulation No 806/2014 provides that the SRB may use the SRF in order to compensate them.

203 Thus, Regulation No 806/2014 ensures that shareholders and creditors will not be treated less favourably, as a result of the resolution, than they would have been in the context of normal insolvency proceedings, by providing, where appropriate, for a compensation mechanism. In accordance with the right to property enshrined in Article 17(1) of the Charter, in the event that a resolution scheme leads to an infringement of the right to property of the shareholders and creditors, Regulation No 806/2014 establishes a mechanism ensuring fair compensation for their loss.

204 Contrary to the applicant’s submissions, insolvency proceedings are the only alternative to resolution. It is sufficient to recall that, in accordance with Article 18(1) of Regulation No 806/2014, the fact that the entity is failing or is likely to fail and there is no reasonable prospect that any alternative private sector measures or supervisory action could prevent that failure are conditions for the adoption of a resolution action.

205 In that regard, it must be observed that, in the field of State aid, the Court of Justice has held that the scale of losses suffered by shareholders of distressed banks will, in any event, be the same, regardless of whether those losses are caused by a court insolvency order because no State aid is granted or by a procedure for the granting of State aid which is subject to the prerequisite of burden-sharing (judgment of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraph 75).

206 The Court of Justice has stated that paragraph 46 of the Banking Communication provides that ‘the “no creditor worse off principle” should be adhered to’ and that ‘subordinated creditors should therefore not receive less, in economic terms, than what their instrument would have been worth if no State aid were to be granted’ (judgment of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraph 77).

207 According to the Court of Justice, it follows from that paragraph that the burden-sharing measures on which the grant of State aid in favour of a bank showing a shortfall is dependent cannot cause any detriment to the right to property of subordinated creditors that those creditors would not have suffered within insolvency proceedings that followed such aid not being granted. That being the case, it cannot reasonably be maintained that the burden-sharing measures, such as those laid down by the Banking Communication, constitute interference in the right to property of the shareholders and the subordinated creditors (judgment of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraphs 78 and 79).

208 It must therefore be held, by analogy, that the application of the no creditor worse off principle, laid down in Article 15(1)(g) of Regulation No 806/2014, guarantees the shareholders of an entity which is the subject of a resolution action fair compensation in accordance with the requirements of Article 17(1) of the Charter.

209 Moreover, by document lodged at the Registry of the General Court on 21 January 2020, the applicant introduced a new plea in law on the basis of Article 84(2) of the Rules of Procedure. It submits that the order of 10 October 2019, Aeris Invest v SRB (T‑599/18, not published, appeal pending, EU:T:2019:740) has a direct impact on the plea of illegality in respect of Articles 15 and 22 of Regulation No 806/2014 and that the allegations made in the fourth plea must be supplemented in the light of that order.

210 The Commission, the SRB, the Kingdom of Spain, the Council and Banco Santander submit that the arguments put forward by the applicant on 21 January 2020 constitute a new plea in law which is inadmissible.

211 Since the applicant confirmed at the hearing that this was not a new plea in law but an amplification of the fourth plea, the Court will confine itself to examining the new arguments raised on 21 January 2020 in so far as they support the plea of illegality raised in the fourth plea in law.

212 The applicant submits that it is apparent from paragraphs 48 and 49 of the order of 10 October 2019, Aeris Invest v SRB (T‑599/18, not published, appeal pending, EU:T:2019:740), against which it has lodged an appeal, that Regulation No 806/2014 does not provide for compensation for shareholders who are deprived of their right to property in cases such as that of Banco Popular. According to that order, the shareholders of Banco Popular were not entitled to compensation, even though the actual value of Banco Popular was higher than that attributed to it in valuation 2. The applicant infers from that that Regulation No 806/2014 does not provide for an appropriate compensation scheme for shareholders who are deprived of their right to property and that the plea of illegality must therefore be upheld. It adds that the compensation provided for in Article 20(16) of Regulation No 806/2014 would not be appropriate and sufficient.

213 It must be recalled that, in its order of 10 Octob