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

1 June 2022 ( *1 )

(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 – Obligation to state reasons – Principle of good administration – Article 20 of Regulation (EU) No 806/2014 – Right to be heard – Right to property)

In Case T‑570/17,

Algebris (UK) Ltd, established in London (United Kingdom),

Anchorage Capital Group LLC, established in New York, New York (United States),

represented by T. Soames, N. Chesaites, lawyers, and R. East, Solicitor,

applicants,

v

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

defendant,

supported by

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,

and by

Banco Santander, SA, established in Santander (Spain), represented by J. Rodríguez Cárcamo, A. Rodríguez Conde, D. Sarmiento Ramírez-Escudero, lawyers, and G. Cahill, Barrister,

interveners,

APPLICATION based on Article 263 TFEU for annulment of Commission Decision (EU) 2017/1246 of 7 June 2017 endorsing the resolution scheme for Banco Popular Español, S.A. (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: P. Cullen, Administrator,

having regard to the written part of the procedure and further to the hearing on 24 June 2021,

gives the following

Judgment

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 stage towards setting up the banking union consisted of 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). According to recital 12 of that regulation, an SSM should ensure that the European 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 specific tasks on the European Central Bank (ECB) 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 European Union and each Member State.

3 Thereafter, 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 of that directive states the following: ‘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 between resolution authorities for deficiencies in 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, given that, first, Directive 2014/59 did not lead to the centralisation of decision making in the field of resolution, that it essentially made resolution tools and common resolution powers available to the national authorities of each Member State, and that it left them a margin of discretion as regards the use of those tools and the use of national financing arrangements for resolution, and that, second, 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 put in place a Single Resolution Mechanism (SRM).

6 Thus, the second stage 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 Under the first paragraph of Article 1 of Regulation No 806/2014, the purpose of that regulation is to establish uniform rules and a uniform procedure for the resolution of the entities defined in Article 2, which 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 of the European Union and the European Commission, and the national resolution authorities, within the framework of the SRM established by that regulation. It is also provided that the SRM is to be supported by a single resolution fund (SRF).

10 Pursuant to 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 satisfied.

11 The first condition requires that the entity is failing or is likely to fail. The assessment of that condition is carried out by the ECB, after consulting the SRB, or by the SRB, and is deemed to be satisfied 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 requires there to be no reasonable prospect that any alternative private sector measures or supervisory action would prevent its failure within a reasonable time frame.

13 The third condition requires that a resolution action is necessary in the public interest, that is to say that it is necessary in order to achieve 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 follows: 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 must 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 According to Article 20(15) of Regulation No 806/2014, the valuation is to 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 satisfied, the SRB is to adopt 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 set out in Article 15 of Regulation No 806/2014, which include the principle that the shareholders of the institution under resolution are to 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 is to determine 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 in the entity concerned in accordance with 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 grant of State aid or use of the SRF.

21 According to Article 18(7) of Regulation No 806/2014, immediately after its adoption, the SRB is to transmit the resolution scheme to the Commission. Within 24 hours from the transmission of the resolution scheme by the SRB, the Commission must either endorse the resolution scheme, or object to it with regard to the discretionary aspects of the resolution scheme in the cases not covered in the third subparagraph, namely compliance with the public interest criterion or a material modification of the amount of the SRF. As regards those 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 by 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 is to be addressed to those authorities and must instruct them to take all necessary measures to implement the scheme in accordance with Article 29 of that regulation by exercising resolution powers.

23 After a resolution action has been adopted, under Article 20(16) of Regulation No 806/2014, the SRB is to ensure that a valuation is carried out by an independent person in order to determine whether the shareholders and creditors would have received better treatment if the institution under resolution had entered into normal insolvency proceedings. Pursuant to Article 76(1)(e) of Regulation No 806/2014, that valuation may lead to the payment of compensation to shareholders or creditors if they have incurred greater losses under the resolution than they would have incurred in a winding up under normal insolvency proceedings.

Background to the dispute and events subsequent to the action being brought

24 The applicants, Algebris (UK) Ltd and Anchorage Capital Group LLC, are investment fund managers which held additional Tier 1 capital instruments and Tier 2 capital instruments issued by Banco Popular Español, SA (‘Banco Popular’) before a resolution scheme was adopted in respect of Banco Popular.

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 preferred resolution tool in that 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 (CNMV) (National Securities Market Commission (CNMV), Spain), 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 as 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.

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 (FROB) (Fund for Orderly Bank Restructuring (FROB), Spain), concerning the marketing of Banco Popular. 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 present non-binding 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 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 process letter’) setting the deadline for the submission of bids at midnight on 6 June 2017.

64 Still on the same date, BBVA, one of the two potential buyers 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 EUR 1. 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.

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 2098429046, 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 EUR 1. 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).

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) (‘the contested decision’) and notified it to the SRB. Consequently, the resolution scheme entered into force on the same day.

79 Recital 4 of the contested decision 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.

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.

Procedure and forms of order sought

84 By application lodged at the Court Registry on 17 August 2017, the applicants brought the present action.

85 By documents lodged at the Court Registry on 20 November and 18 December 2017, respectively, Banco Santander and the SRB applied for leave to intervene in the present proceedings in support of the form of order sought by the Commission. By orders of 12 April 2019, the President of the Eighth Chamber of the General Court granted the SRB and Banco Santander leave to intervene. The interveners submitted their statements in intervention, and the applicants submitted their observations on those statements within the prescribed time limits.

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

87 By letter lodged at the Court Registry on 31 October 2019, the applicants produced new evidence pursuant to Article 85(3) of the Rules of Procedure. The Commission and the SRB lodged their observations within the prescribed time limit.

88 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.

89 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.

90 By letter lodged at the Court Registry on 16 October 2020, the applicants produced new evidence pursuant to Article 85(3) of the Rules of Procedure. The Commission, the SRB and Banco Santander lodged their observations within the prescribed period.

91 On 15 March 2021, the Court, in the context of the measures of organisation of procedure provided for in Article 89 of the Rules of Procedure, invited the Commission to produce various documents. By letter of 30 March 2021, the Commission stated that it could not accede to the Court’s request, but that it would be in a position to produce the documents requested by way of a measure of inquiry.

92 On 15 April 2021, the Court, in the context of the measures of organisation of procedure provided for in Article 89 of the Rules of Procedure, invited the SRB to produce various documents. By letter of 20 April 2021, the SRB replied that the documents requested were in part confidential and that they could be produced if the Court adopted a measure of inquiry.

93 By order of 21 May 2021, the Court ordered the Commission, 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 and the ECB’s assessment of 6 June 2017 that Banco Popular was failing or was likely to fail. The Court also ordered the SRB to produce non-confidential and confidential versions of the letter from Banco Popular to the ECB dated 6 June 2017, including the annex thereto, and of the ECB’s letter of 18 May 2017 sent to Banco Popular.

94 By letter lodged at the Court Registry on 4 June 2021, the applicants produced new evidence pursuant to Article 85(3) of the Rules of Procedure. The other parties were invited to submit their observations on that request at the hearing.

95 By order of 16 June 2021, the Court, first, removed from the case file the confidential versions of the documents produced by the Commission and the SRB pursuant to the order of 21 May 2021 and, second, sent the other parties the letter of 6 June 2017 from Banco Popular to the ECB without its annex.

96 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.

97 The parties presented oral argument and answered oral questions put to them by the Court at the hearing on 24 June 2021.

98 The applicants claim that the Court should: – annul the contested decision or, in the alternative, Article 1 thereof; – order the Commission to pay the costs.

99 The Commission contends that the Court should: – dismiss the action; – order the applicants to pay the costs.

100 Banco Santander and the SRB contend that the Court should: – dismiss the action; – order the applicants to pay the costs.

Law

101 In support of their action, the applicants put forward six pleas in law. The first plea alleges that the Commission failed to examine the resolution scheme before endorsing it. The second plea alleges infringement of the obligation to state reasons. The third plea alleges breach of professional secrecy and of the obligation of good administration. The fourth plea alleges manifest errors of assessment in the application of Articles 14, 18, 20 to 22 and 24 of Regulation No 806/2014. The fifth plea alleges infringement of the right to property. The sixth plea alleges infringement of the right to be heard.

102 As a preliminary point, it should be noted that, as regards the scope of the review carried out by the Court, the applicants claim that the Court must carry out a full and thorough review of the resolution scheme.

103 The Commission submits that, in actions for annulment, the Courts of the European Union are required, when a complex technical question arises, to examine the accuracy of the findings of fact and law on which the contested measure is based, to verify that there has been no manifest error or misuse of powers and to verify that the defendant clearly did not exceed the limits of its discretion.

104 In that regard, it should 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 measure is based on an assessment of highly complex scientific and technical facts, and in the case of complex economic assessments.

105 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 Courts 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 Courts cannot substitute its assessment of scientific and technical facts for that of the authorities of the European Union 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).

106 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 misuse of powers. In the context of this review, therefore, it is not for the EU Courts to substitute its 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).

107 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 concluded that the principles stemming from the case-law referred to in paragraphs 105 and 106 above apply to the review which the Court is called upon to carry out.

108 However, while the SRB is recognised as having a margin of 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 the economic data on which its decision is based. 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 diMilano v Commission, C‑160/19 P, EU:C:2020:1012, paragraph 115 and the case-law cited).

109 In that regard, in order to establish that the SRB committed a manifest error in assessing the facts such as to justify the annulment of the resolution scheme, the evidence adduced by the applicants must be sufficient to make the factual assessments used 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).

First plea in law, alleging that the Commission failed to examine the resolution scheme before endorsing it

110 The applicants submit, in essence, that, in view of the short time frame available to the Commission to endorse the resolution scheme, it was not in a position to carry out an adequate assessment of the discretionary aspects of that scheme, in breach of the principles governing delegation of power established in the judgment of 13 June 1958, Meroni v High Authority (9/56, EU:C:1958:7). The applicants submit that the Commission merely ‘rubber-stamped’ the resolution scheme, thereby unlawfully delegating the exercise of discretionary power to the SRB.

111 The Commission submits that from 2 May 2017, the date on which it was informed by the SRB that Banco Popular was experiencing liquidity problems and that resolution action might need to be taken, it was involved in preparations for all possible outcomes. The Commission is present as a permanent observer within the SRB’s decision-making bodies. It had access to all the documents and its experts helped the SRB to draw up the resolution scheme. It claims that it could therefore have carried out the required assessment of that scheme within the time frame available to it.

112 It should be noted that, 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 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’.

113 The Court of Justice added that it 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 replaces 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).

114 In order to assess the scope of the present plea, it is necessary to specify the procedure for adopting the resolution schemes established by Regulation No 806/2014 and, in particular, what the role conferred on the Commission is.

115 In that regard, it should 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).

116 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.

117 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.

118 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.

119 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 …’

120 Thus, as regards the resolution procedure, Article 18(7) of Regulation No 806/2014 provides that the Commission must either endorse the resolution scheme or object to its discretionary aspects and that a resolution scheme may enter into force only if the Council or the Commission has not raised any objections within 24 hours of its submission by the SRB.

121 Therefore, pursuant to 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 it to produce legal effects. The EU legislature thus conferred on an institution legal and political responsibility to determine 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).

122 Accordingly, the Commission must have actually assessed discretionary aspects of the resolution scheme before its entry into force. Otherwise, as the applicants claim, the Commission unlawfully delegated its discretion to the SRB in breach of the principles governing the delegation of power stemming from the judgment of 13 June 1958, Meroni v High Authority (9/56, EU:C:1958:7).

123 If, as the applicants maintain, the resolution scheme entered into force following the Commission’s endorsement which was not based on an assessment, but on a mere validation, that would have the consequence that the SRB assessed only the discretionary aspects involving a choice of economic policy and therefore of the need to implement the resolution, which would not be consistent with the principles laid down in the judgment of 13 June 1958, Meroni v High Authority (9/56, EU:C:1958:7).

124 In that regard, in recital 4 of the contested decision, the Commission stated that it was in agreement with the resolution scheme, in particular with the reasons put forward by the SRB to justify the need for resolution action in the public interest.

125 Thus, the Commission endorsed the SRB’s decision to place Banco Popular under resolution, taking the view, inter alia, that the choice of the sale of business tool was necessary and proportionate in order to attain the objectives of ensuring the continuity of critical functions and to avoid significant negative effects on financial stability.

126 By their arguments, the applicants submit that, having regard to the course of the procedure, the Commission merely endorsed the resolution scheme, without examining it, unlawfully delegating the exercise of its discretionary power to the SRB.

127 In the first place, the applicants claim that the resolution scheme was transmitted to the Commission on 7 June 2017 at 5.13 a.m. and entered into force on the same day at 6.30 a.m. They submit that in the short time available it was simply impossible for the Commission to have discharged its duty to conduct a proper assessment of the discretionary aspects of the resolution scheme.

128 In the second place, the applicants state that the minutes of the Commission meeting of 7 June 2017 indicate that the resolution scheme was endorsed at the end of an urgent written procedure. According to the applicants, the Directorate-General for Financial Stability, Financial Services and the Capital Markets Union should have examined whether the SRB had reached appropriate conclusions with regard to the discretionary aspects of the resolution scheme and should then have made its recommendation to the Commission to endorse the resolution scheme. That recommendation should have been communicated to the Commissioners’ cabinets, to all the Directorates-General and to the Legal Service, specifying a time frame within which objections had to be registered, and, in the absence of objections, the decision should have been deemed to have been adopted in accordance with Article 12 of the Rules of Procedure of the Commission. They argue that it is impossible for the Commission, by following that process in a period of just 77 minutes, to carry out any proper assessment of the discretionary aspects of the resolution scheme. Article 18(7) of Regulation No 806/2014 allows the Commission a period of 24 hours.

129 It should be noted that the applicants do not dispute that the resolution scheme had to be adopted as a matter of urgency.

130 It is apparent from Article 30 of Regulation No 806/2014, first, that the SRB is to inform the Commission of any action it takes in order to prepare for resolution and, second, that, in the exercise of their respective responsibilities under that regulation, the SRB and in particular the Commission are to cooperate closely, in particular in the resolution planning, early intervention and resolution phases, and that they are to provide each other with all information necessary for the performance of their tasks.

131 In addition, Article 43(3) of Regulation No 806/2014 provides that the Commission is to designate a representative entitled to participate in the meetings of executive sessions and plenary sessions of the SRB as a permanent observer, and that its representative is entitled to participate in the debates and is to have access to all documents.

132 As the SRB and the Commission state, the latter was involved in the various phases preceding the adoption of the resolution scheme from May 2017, in accordance with its obligations under Regulation No 806/2014.

133 In that regard, the Commission sets out in the defence the various phases of its participation in the preparatory stages for the adoption of the resolution scheme. It mentions, in particular, several meetings with the SRB from 22 May 2017 and daily meetings from 30 May 2017, the reception, on 6 and 7 June 2017, of preliminary resolution schemes sent by the SRB and the activity of its various services from 6 June 2017 at 5.30 p.m. until 7 June at 5.13 a.m.

134 The Commission also states that, as a permanent observer, it had access to all documents relevant to the preparation of the resolution scheme, in particular to those concerning the financial situation of Banco Popular, and that its experts participated in the preparation of the resolution scheme with the SRB, notably by drawing up a template resolution scheme. It adds that, as early as 6 June 2017, its experts were present on the SRB’s premises in order to help the latter draw up the resolution scheme.

135 In that regard, in response to a measure of organisation of procedure, first, the Commission produced a list of minutes of meetings of executive sessions of the SRB in which it participated since 22 May 2017. That list attests to the Commission’s participation in three meetings on 24 May, 2 June, and 6 and 7 June 2017. Second, the Commission produced a list of informal internal reports of its services in connection with the preparation of the resolution scheme, dated 22, 24 and 29 May, and 2 and 6 June 2017. Third, the Commission produced a number of emails exchanged between its services and the SRB, dated 1, 3, 6 and 7 June 2017, relating to the transmission of resolution models according to the sale of business tool scenario and preliminary drafts of the resolution scheme. Those emails attest, in particular, to the receipt by the Commission of preliminary drafts of the resolution scheme on 6 June 2017 at 6.59 p.m. and on 7 June 2017 at 12:33 a.m.

136 It follows that the Commission’s services participated in several meetings with the SRB and that it had become aware of and participated in the drafting of the preliminary resolution schemes before 7 June 2017 at 5.13 a.m.

137 At the hearing, the applicants acknowledged that the Commission had participated in the preparatory stages of the adoption of the resolution scheme. However, they maintained that the Commission had not adduced any evidence that the discussions had focused on the final version of the resolution scheme.

138 In view of its participation in the preparatory stages leading to the adoption of the resolution scheme, the Commission was already aware of the difficulties encountered by Banco Popular, the measures envisaged by the SRB to remedy those difficulties and the essential content of the resolution scheme. The applicants cannot therefore maintain that it had not already had time to evaluate the resolution scheme. The fact that the discussions during the preparatory stages did not concern the final drafting of the resolution scheme is irrelevant in that regard.

139 It follows that this plea is based on an erroneous assumption on the part of the applicants that the Commission’s intervention in the preparatory stages leading to the adoption of the resolution scheme was limited to the interval between the SRB sending the resolution scheme on 7 June 2017 at 5.13 a.m. and its endorsement by the Commission.

140 Therefore, in so far as it relies on an incorrect assumption, the applicants’ argument that the Commission merely endorsed the resolution scheme without carrying out a proper assessment of the discretionary aspects of that scheme, in breach of the principles governing delegation of power, must be rejected.

141 That conclusion is not called into question by the other arguments put forward by the applicants.

142 As regards the applicants’ argument that the details of the resolution scheme were different from those provided in the resolution plan, adopted under Article 8 of Regulation No 806/2014 and endorsed in December 2016, suffice it to state that that argument is ineffective. The resolution scheme adopted by the SRB and endorsed by the Commission is not based on that plan, as is stated in recitals 44 to 46 of the resolution scheme.

143 As regards the applicants’ argument that Article 18(7) of Regulation No 806/2014 allows the Commission a period of 24 hours within which to adopt the resolution scheme, suffice it to state that this is a maximum period. As the Commission points out, a period of 24 hours is the longest period available to it when a resolution takes place at weekends. Where, as in the present case, a credit institution’s failure occurs on a weekday, resolution action must be taken during the night in order to ensure the continuity of that institution’s critical functions. Thus, the resolution scheme was to be adopted as a matter of urgency before 7 June 2017 at 7.00 a.m., when the markets opened.

144 Consequently, the first plea in law must be rejected as unfounded.

Second plea in law, alleging breach of the obligation to state reasons

145 The applicants submit that the reasons given in recital 4 of the contested decision are inadequate. First, they submit that the statement in recital 4 of the contested decision refers generally to the reasons put forward by the SRB, without identifying any particular reason or specific provision of the resolution scheme. Second, the ‘reasons’ relating to the public interest criterion do not disclose anything about the Commission’s own assessment, but merely endorse the resolution scheme. Third, the contested decision contains no reasons regarding the discretionary aspects of the resolution scheme which the Commission was required to assess. The Commission merely stated that it endorsed the resolution scheme, without providing any further explanation or reasoning.

146 It is settled case‑law of the Court of Justice that the statement of reasons required by Article 296 TFEU must be appropriate to the measure at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the court having jurisdiction to exercise its power of review. It is not necessary for the reasoning to specify all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 296 TFEU must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (see judgments of 8 May 2019, Landeskreditbank Baden-Württemberg v ECB, C‑450/17 P, EU:C:2019:372, paragraphs 85 and 87 and the case-law cited, and of 21 October 2020, ECB v Estate of Espírito Santo Financial Group, C‑396/19 P, not published, EU:C:2020:845, paragraph 41 and the case-law cited).

147 Furthermore, the degree of precision of the statement of the reasons for a measure must be weighed against practical realities, and the time and technical facilities available for taking the measure (see judgments of 6 November 2012, Éditions Odile Jacob v Commission, C‑551/10 P, EU:C:2012:681, paragraph 48 and the case-law cited, and of 23 May 2019, KPN v Commission, T‑370/17, EU:T:2019:354, paragraph 139 and the case-law cited; judgment of 27 January 2021, KPN v Commission, T‑691/18, not published, EU:T:2021:43, paragraph 162).

148 It should be borne in mind that it is apparent from recital 4 of the contested decision that: ‘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 [No 806/2014].’

149 In addition, first, in recital 2 of the contested decision, the Commission referred to the fact that the SRB had stated in the resolution scheme that all the conditions for initiating a resolution procedure set out in the first subparagraph of Article 18(1) of Regulation No 806/2014 were satisfied so far as concerns Banco Popular and that it had assessed the reasons why resolution action was necessary in the public interest. Second, in recital 3 of the contested decision, the Commission stated that the resolution scheme, in accordance with Article 18(6) of Regulation No 806/2014, placed Banco Popular under resolution and determined the application of the sale of business tool, and that it also set out the reasons why all those elements were sufficient.

150 It follows that the Commission, in the contested decision, expressly referred to the reasons why the SRB had considered that the conditions for adopting the resolution scheme were met and that the sale of business tool should be applied. Thus, the endorsement of the resolution scheme set out in recital 4 of the contested decision must be read in the light of those other recitals and concerns all of those reasons. In that recital, the Commission expressly stated that it agreed with the reasons set out in the resolution scheme justifying the adoption of resolution action in respect of Banco Popular, in particular as regards the public interest criterion. Thus, contrary to the applicants’ submission, the Commission expressly referred in the contested decision to the discretionary aspects of the resolution scheme, in particular compliance with the public interest criterion.

151 Thus, it must be concluded that the resolution scheme and its statement of reasons form part of the context in which the contested decision was adopted.

152 However, as the Commission points out, the applicants do not claim that the resolution scheme is not supported by an adequate statement of reasons.

153 In addition, it should be borne in mind that, pursuant to Article 18(7) of Regulation No 806/2014, the Commission must either ‘endorse’ the resolution scheme or object to its discretionary aspects.

154 It follows that, where, as in the present case, the Commission endorses the resolution scheme, the statement of reasons for its decision may be limited to indicating that it agrees with the reasons contained in the scheme. Any other additional justification for its endorsement could consist only of a repetition of the elements already contained in the resolution scheme. According to Article 18(7) of Regulation No 806/2014, the Commission does not have to repeat the SRB’s analysis in its decision, but only endorse it.

155 Furthermore, in accordance with the case-law cited in paragraph 147 above, account must be taken of the very short period available to the Commission under Article 18(7) of Regulation No 806/2014 in which to adopt its decision from the transmission of the resolution scheme by the SRB.

156 It follows that a statement of reasons by which the Commission indicates that it agrees with the content of the resolution scheme and with the reasons put forward by the SRB to justify its adoption, must be considered sufficient to justify an endorsement.

157 Consequently, the second plea in law must be rejected as unfounded.

Third plea in law, alleging infringement of the obligations of professional secrecy and good administration

158 The applicants submit that there was a breach of the principle of confidentiality and professional secrecy, laid down in Article 339 TFEU, and of the right to good administration, enshrined in Article 41 of the Charter of Fundamental Rights of the European Union (‘the Charter’).

159 According to the applicants, the interview given on 23 May 2017 by the Chair of the SRB to the Bloomberg television channel and the Reuters article of 31 May 2017, referred to in paragraph 42 above, constitute an infringement of the obligation of confidentiality and professional secrecy attributable to the SRB or the Commission. They submit that the disclosures of 23 and 31 May 2017 caused Banco Popular’s serious liquidity crisis and, therefore, led to its resolution. The applicants rely on a counterfactual scenario according to which, in the absence of those disclosures and therefore of a liquidity crisis, the resolution scheme would not have been adopted or would have been different in content.

160 The Commission submits that, in order for a resolution scheme to be adopted and endorsed, it is sufficient that the conditions of the resolution are met and that the reasons which led to that situation do not affect the validity of the contested decision. The SRB also contends that the events criticised by the applicants cannot affect the lawfulness of the contested decision, in so far as the question of who or what caused Banco Popular’s failure is irrelevant.

161 It should be noted that, even if the applicants had established that the SRB or the Commission had disclosed confidential information to the press, according to settled case-law, an irregularity of that kind may lead to the annulment of the decision at issue if it is established that the content of that decision would have differed if that irregularity had not occurred (see judgments of 6 July 2000, Volkswagen v Commission, T‑62/98, EU:T:2000:180, paragraph 283 and the case-law cited; of 5 April 2006, Degussa v Commission, T‑279/02, EU:T:2006:103, paragraph 416 and the case-law cited; and of 3 March 2011, Siemens v Commission, T‑110/07, EU:T:2011:68, paragraph 402 and the case-law cited).

162 In that regard, as the Commission and the SRB submit, a resolution scheme is validly adopted where the conditions laid down by Regulation No 806/2014 are satisfied, irrespective of the reasons that caused the entity in question to fail or to be likely to fail.

163 The applicants do not dispute that the conditions laid down in Article 18 of Regulation No 806/2014 were satisfied at the time the resolution scheme was adopted.

164 Thus, the SRB, having taken the view that the conditions laid down in Article 18(1) of Regulation No 806/2014 were satisfied, adopted the resolution scheme and the Commission, having considered that the resolution scheme was consistent with the provisions of Regulation No 806/2014, endorsed that scheme. The circumstances that led to Banco Popular fulfilling the conditions justifying the adoption of the resolution scheme, in particular the condition that it was failing or was likely to fail, are irrelevant.

165 Consequently, an alleged causal link, relied on by the applicants, between the disclosures of 23 and 31 May 2017 and Banco Popular’s liquidity crisis is irrelevant and cannot lead to the annulment of the contested decision.

166 It follows that the argument raised by the applicants at the hearing that the Commission infringed the principle of good administration by approving the resolution scheme, even though the resolution of Banco Popular resulted from the infringement by the SRB of its obligations of confidentiality and professional secrecy, is also ineffective.

167 Moreover, the applicants cannot reasonably claim that the disclosures of 23 and 31 May 2017 caused the serious liquidity crisis in Banco Popular and that, if there had been no unlawful disclosure and therefore no liquidity crisis at the beginning of June 2017, Banco Popular’s resolution would not have been required or would have been different.

168 Those arguments are based on a partial and erroneous presentation of the facts giving rise to Banco Popular’s liquidity crisis and the causes that led to the situation in which it is failing or is likely to fail.

169 Thus, it must be recalled that, in its assessment of the situation in which Banco Popular is failing or is likely to fail, referred to in paragraphs 53 to 61 above, the ECB referred to the various events giving rise to the deterioration of Banco Popular’s liquidity situation.

170 In recital 24 of the resolution scheme, the SRB cited other circumstances which had led to the rapid deterioration of Banco Popular’s liquidity situation, that is to say: – in February 2017, Banco Popular disclosed the need for extraordinary provisions amounting to EUR 5.7 billion leading to a consolidated loss of EUR 3.485 billion and appointed a new chairman; – on 10 February 2017, DBRS downgraded Banco Popular’s rating; – on 3 April 2017, Banco Popular released an ad hoc public statement on the outcome of internal audits potentially having a significant impact on its financial statements and confirmed the replacement of its CEO less than one year after the latter took office; – on 7 April 2017, Standard & Poor’s and, on 21 April, Moody’s, downgraded Banco Popular’s rating; – on 12 May 2017, Banco Popular breached the liquidity coverage requirement of 80% and was unable to re-establish compliance with the regulatory limit thereafter; – continuous negative press coverage of Banco Popular’s financial results and of the alleged imminent risk of bankruptcy or illiquidity resulted in an increase of deposit outflows; – on 6 June 2017, DBRS and Moody’s downgraded Banco Popular’s rating.

171 The SRB stated that all those circumstances had caused significant withdrawals of deposits.

172 It is apparent from those facts, which are not disputed by the applicants, that Banco Popular’s situation had already deteriorated well before 23 May 2017 and that Banco Popular’s liquidity crisis was caused by multiple factors which originated in the bank’s poor results announced in February and April 2017. In particular, the liquidity coverage requirement for Banco Popular had not been in compliance with the legal requirements since 12 May 2017.

173 It should be noted that the applicants cannot ignore all the objective circumstances that caused Banco Popular’s liquidity problems, particularly since April 2017. They cannot reasonably argue that the declaration of 23 May 2017 and the article of 31 May 2017, even if they involved a breach of the principle of confidentiality on the part of the SRB or the Commission, were the cause of Banco Popular’s liquidity crisis and that, had it not been for those statements, the resolution would not have been necessary.

174 It follows that the counterfactual scenario relied on by the applicants and contained in their expert report annexed to the application, seeking to establish that, if there had been no unlawful disclosure or leak and therefore no liquidity crisis at the beginning of June 2017, Banco Popular’s resolution would not have been required or would have been different, is based on a false premiss.

175 In so far as the solutions envisaged in the expert report annexed to the application are based on the purely theoretical assumption that Banco Popular would not have had to face a liquidity crisis and envisage a situation in which Banco Popular would have had to face a capital shortage, it must be concluded that that counterfactual scenario is irrelevant.

176 It is also apparent that the new evidence lodged by the applicants with the Court Registry on 31 October 2019, pursuant to Article 85(3) of the Rules of Procedure, consisting of a letter of 30 May 2017 from Pacific Investment Management Company LLC (PIMCO) to Deutsche Bank, concerning the existence of an alternative solution to resolution in the context of that counterfactual scenario, is not relevant to the outcome of the case.

177 In any event, the applicants have not established the existence of an infringement of the obligation of confidentiality or of professional secrecy attributable to the Commission.

178 By their first complaint, the applicants claim that the EU legislature has conferred significant bank resolution powers on the SRB and that the mere suggestion that it is in the process of examining whether it must apply its powers to a particular entity constitutes a market significant event, leading investors, creditors and depositors to take protective steps to avoid loss. Therefore, strict observance by the SRB of the principle of professional secrecy is essential and Article 88(1) of Regulation No 806/2014 imposes an obligation of professional secrecy on the SRB and its officials.

179 In that regard, they submit that the interview given on 23 May 2017 by the Chair of the SRB to the television channel Bloomberg, according to which the SRB was ‘watching’ Banco Popular, constituted information that the SRB was examining the bank, within the meaning of recital 116 of Regulation No 806/2014, and is attributable to the SRB. Consequently, that statement constitutes an infringement by the SRB of the obligations of professional secrecy and good administration.

180 It should be noted that, by that complaint, the applicants allege an infringement of the obligations of professional secrecy and confidentiality on the part of the SRB and not the Commission. However, since the SRB is not a party to the present dispute, that complaint must be rejected as ineffective.

181 In that regard, by letter lodged at the Court Registry on 4 June 2021, the applicants submitted evidence concerning, first, an order of the Juzgado Central de Instruccion no 4 de la Audiencia Nacional (Central Court of Preliminary Investigation No 4 of the National High Court, Spain) of 19 May 2021, providing for the Chair of the SRB to be heard in connection with her statements during the interview granted to Bloomberg and, second, an article from elconfidencial of27 May 2021 in which it is stated that the President of the FROB in the same proceedings before the Audiencia Nacional (National High Court) complained about those statements of the Chair of the SRB.

182 Suffice it to state that since those documents concern the SRB, and not the Commission, they are not relevant to the outcome of the present dispute.

183 By their second complaint, the applicants submit that an article published by Reuters on 31 May 2017 citing an ‘EU official’, according to which the SRB was following Banco Popular ‘with a view to possible intervention’, constitutes an infringement of the obligation of professional secrecy attributable to the SRB or to officials of other EU institutions, such as the Commission, and an infringement of the right to good administration.

184 In that regard, for the same reason as the one set out in paragraph 180 above, the applicants’ arguments seeking to impute to the SRB the comments attributed to an anonymous EU official, reported in that article, and to establish that that official acted in breach of Article 88 of Regulation No 806/2014, must be rejected as ineffective.

185 Article 339 TFEU provides: ‘The members of the institutions of the Union, the members of committees, and the officials and other servants of the Union shall be required, even after their duties have ceased, not to disclose information of the kind covered by the obligation of professional secrecy, in particular information about undertakings, their business relations or their cost components.’

186 According to the case-law, while this provision is mainly aimed at information collected from undertakings, the words ‘in particular’ show that it is a general principle which applies also to other confidential information (see, by analogy, judgment of 3 March 2011, Siemens v Commission, T‑110/07, EU:T:2011:68, paragraph 400 and the case-law cited).

187 Furthermore, it is apparent from recital 116 of Regulation No 806/2014 that: ‘Resolution actions should be properly notified and, subject to the limited exceptions laid down in this Regulation, made public. However, as information obtained by the [SRB], the national resolution authorities and their professional advisers during the resolution process is likely to be sensitive, before the resolution decision is made public, that information should be subject to the requirements of professional secrecy. The fact that information on the contents and details of resolution plans and the result of any assessment of those plans may have far-reaching effects, in particular on the undertakings concerned, must be taken into account. Any information provided in respect of a decision before it is taken, be it on whether the conditions for resolution are satisfied, on the use of a specific tool or of any action during the proceedings, must be presumed to have effects on the public and private interests concerned by the action. However, information that the [SRB] and the national resolution authorities are examining a specific entity could be enough to have negative effects on that entity. It is therefore necessary to ensure that there are appropriate mechanisms for maintaining the confidentiality of such information, such as the content and details of resolution plans and the result of any assessment carried out in that context.’

188 It is appropriate to recall the content of the article published by Reuters on 31 May 2017, entitled ‘EU warned of wind-down risk for Spain’s Banco Popular’. That article states that, according to an anonymous EU official, 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 and that the Chair of the SRB had recently issued an ‘early warning’. According to that article, that official also stated that the Chair of the SRB had stated that the SRB was following the (Banco Popular) procedure with particular attention with a view to a possible intervention, and it added that the bank’s merger bid may be fruitless.

189 That Reuters article also states that, according to another source, also anonymous, general preparations were under way, although concrete steps had still not been taken. According to that article, a spokesperson for Banco Popular had stated that the bank was working on several plans, including a merger, a capital hike and asset sales.

190 It should also be noted that that article mentions the SRB’s press release, dated the same day, in which the SRB stated that it was not commenting on the specific difficulties of a bank, that it could not confirm the interpretations regarding alleged quotes made by its Chair and that it never issued warnings about banks.

191 It must be concluded that the applicants have not put forward any argument capable of establishing that that article gave rise to a breach of the obligation of professional secrecy attributable to the Commission.

192 In the first place, the comments of that EU official, reported in that article, did not relate to confidential information which could be known only to Members of the Commission.

193 Thus, first, as regards the official’s assertion that they had been informed that Banco Popular could be liquidated if it did not succeed in finding a purchaser, suffice it to note that that information was already public.

194 As is indicated in paragraphs 40 to 42 above, several press articles already mentioned in May the fact that Banco Popular was in difficulty and that it had initiated a private sale process.

195 It is apparent in particular from an article of 11 May 2017, published on the website elconfidencial.com, that the Chairman of Banco Popular had ordered the urgent sale of the bank because of a risk of insolvency. The reference in the article of 31 May 2017 to the fact that the EU officials were informed by ‘one of Europe’s top bank watchdogs’ seems to correspond to the information given in that article, according to which, as a result of a serious risk of insolvency due, in particular, to the continued outflow of deposits, the Chairman of Banco Popular had been forced to implement the sale process in order to meet the ECB’s requirements. In addition, an article of 15 May 2017, published on the website elconfidencial.com, stated that the plan to sell Banco Popular had been implemented by its Chairman after the ECB’s inspection.

196 Second, the official mentioned an ‘early warning’ issued by the Chair of the SRB. Suffice it to state that it is not for the SRB to make such an assertion, a point which the SRB recalled, moreover, in its press release of 31 May 2017.

197 Third, as regards that official’s assertion that ‘the Chair of the SRB had stated that the SRB was following the (Banco Popular) procedure with particular attention with a view to a possible intervention’, suffice it to state that those remarks reiterate what the Chair of the SRB had stated publicly during her interview on the television channel Bloomberg on 23 May 2017, that is to say that Banco Popular was being ‘monitored’. Moreover, the interpretation given to those comments was contradicted by the SRB in its press release.

198 Furthermore, the fact that that article purports to report words of the Chair of the SRB is not sufficient to establish their authenticity, particularly since the person who was supposed to have reported those words is not identified.

199 Fourth, as regards that official’s assertion that the bank’s merger offer might be unfruitful, it is apparent from that article that Banco Popular itself had stated that it would have to postpone the deadline initially set for 10 June 2017 to submit bids in the private sale process.

200 Thus, the possibility that the private sale process launched in April 2017 might be unfruitful cannot be regarded as confidential information, but as a simple deduction from the circumstances, that is to say that, on 31 May 2017, Banco Popular still had not found a buyer in that process and that the date for the closure of the process had been postponed.

201 It follows therefore that, contrary to what the applicants claim, the comments of the EU official who remained anonymous, reported in that article, do not contain confidential information relating to the implementation of a resolution procedure concerning Banco Popular, such as that referred to in recital 116 of Regulation No 806/2014, which could be known only to Commission officials.

202 In the second place, the applicants have not established that the EU official referred to in that article is a Commission official.

203 The view must be taken that many people other than members of the SRB or officials of the Commission were likely to make such comments, having regard, in particular, to the possibilities of exchanging information provided for, inter alia, in Article 88(6) of Regulation No 806/2014.

204 In that regard, it should be noted that the applicants acknowledge that the leak of 31 May 2017 must be attributable to the SRB or to officials of other institutions, such as the Commission, who were aware of the information received from the SRB. In addition, the applicants merely assert that the attribution of the comments made in that article to an EU official is ‘plausible’. The applicants cannot therefore rely on the case-law according to which the Court would attribute a leak to an EU institution or agency if it were obvious that it could come only from that institution or agency.

205 It is also necessary to reject the applicants’ argument that, since the fact that Banco Popular was going to be placed under resolution was known only to a limited number of people within the SRB and the Commission, the only logical conclusion is that that information came from those institutions. Furthermore, the latter have not adduced any evidence to the contrary.

206 Even if the comments reported in that article came from a leak by an EU official and it could be inferred from that article that a resolution of Banco Popular was envisaged, since it has not been established that the Commission’s departments are responsible for the leak of information shown by the press article to which the applicants refer, it is clear from the case-law that such a source of the leak cannot be presumed (see, to that effect, judgment of 15 March 2006, BASF v Commission, T‑15/02, EU:T:2006:74, paragraph 605).

207 In addition, even if it is likely that the Commission may have been the source of that leak, that mere possibility is not sufficient, as the applicants claim, to place on the Commission the burden of proving the contrary (see, to that effect, judgment of 5 April 2006, Degussa v Commission, T‑279/02, EU:T:2006:103, paragraph 412).

208 In the present case, there is no presumption that the Commission was the source of the alleged leak of information, and it is not for the Commission to demonstrate that it was not.

209 Therefore, the applicants’ arguments relating to the fact that the Commission did not investigate the source of the leak of 31 May 2017 or adduce evidence to show that the leak was not imputable to it must be rejected as ineffective.

210 First, it cannot in any way be inferred from the absence of an internal investigation that the Commission has infringed its obligations of confidentiality. Second, the fact that the Commission did not carry out an internal investigation in order to determine the origin of potential leaks of information, after the resolution decision was adopted, is not relevant for the purpose of assessing the legality of the contested decision.

211 In that regard, by letter lodged at the Court Registry on 16 October 2020, the applicants produced new evidence pursuant to Article 85(3) of the Rules of Procedure. That evidence concerned two internal emails of the SRB of 10 and 18 August 2017 concerning a potential leak of information giving rise to the Reuters article of 31 May 2017. The applicants claim that that new evidence confirms that the SRB did not seek to investigate correctly the leak of 31 May, but merely, in essence, summarised the confidentiality measures in force within the SRB.

212 Since that new evidence relates solely to the SRB and does not establish that the alleged leak of information giving rise to the Reuters article of 31 May 2017 is imputable to the Commission, it must be regarded as not being relevant to the outcome of the dispute.

213 It follows from the foregoing that the applicants have not established that the Commission infringed the principle of confidentiality and professional secrecy.

214 Consequently, the third plea in law must be rejected.

Fourth plea in law, alleging manifest errors of assessment in the application of Articles 14, 18, 20 to 22 and 24 of Regulation No 806/2014

215 The applicants claim that valuation 2 carried out by Deloitte was not ‘fair, prudent and realistic’ within the meaning of Article 20(1) of Regulation No 806/2014. Accordingly, they argue that valuation 2 was incapable of supporting the contested decision and that the SRB and the Commission manifestly erred in their assessment that the resolution scheme met the requirements of Articles 14, 18, 20 to 22 and 24 of Regulation No 806/2014.

216 In their reply, the applicants explain that, by that plea, they claim that, since valuation 2 is manifestly incorrect in the light of Article 20 of Regulation No 806/2014, the resolution scheme adopted on the basis of that valuation is unlawful.

217 As the Commission states, the applicants have not put forward any specific argument concerning manifest errors which it allegedly committed in the application of Articles 14, 18, 21, 22 and 24 of Regulation No 806/2014.

218 It must therefore be held that, by that plea, the applicants merely submit that valuation 2 was not ‘fair, prudent and realistic’ within the meaning of Article 20(1) of Regulation No 806/2014 and that, therefore, the Commission made a manifest error of assessment in approving the resolution scheme in so far as it is based on valuation 2.

219 In the present case, it should be noted that the valuation of Banco Popular, carried out before the adoption of the resolution scheme, comprises two reports which are annexed to the resolution scheme.

220 Valuation 1, dated 5 June 2017, was prepared by the SRB under Article 20(5)(a) of Regulation No 806/2014 and 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.

221 Valuation 2, dated 6 June 2017, was drawn up by Deloitte as an independent expert, in accordance with Article 20(10) of Regulation No 806/2014.

222 The resolution scheme states that, given the urgency, valuation 2 was carried out, in accordance with Article 20(10) of Regulation No 806/2014, with the purpose of assessing the value of the assets and liabilities of Banco Popular, providing an evaluation of the treatment that the shareholders and creditors would have received if Banco Popular had entered into normal insolvency proceedings and informing the decision to be taken on the shares or 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.

223 In valuation 2, Deloitte stated that it had relied on the requirements of Article 36 of Directive 2014/59 (corresponding to Article 20 of Regulation No 806/2014) and on Chapter 3 of the final draft of the Regulatory Technical Standards of the European Banking Authority (EBA) No 2017/05 and No 2017/06 of 23 May 2017 on valuation for the purposes of resolution and on valuation to determine difference in treatment following resolution under Directive 2014/59.

224 Article 36(15) of Directive 2014/59 authorises the EBA to develop draft regulatory technical standards to specify the criteria on the basis of which valuations carried out during a resolution procedure must be conducted.

225 Chapter 3 of the final draft regulatory technical standards for the EBA, cited in paragraph 223 above, relates to draft Regulatory Technical Standards No 2017/05 on valuation for the purposes of resolution (‘the regulatory technical standards’) and contains, inter alia, in accordance with Article 36(15) of Directive 2014/59, a draft Commission Delegated Regulation supplementing Directive 2014/59 with regard to regulatory technical standards specifying the criteria relating to the methodology for assessing the value of assets and liabilities of institutions or entities.

226 In addition, it should be noted that, at the date of the resolution, those regulatory technical standards were not binding, since the second subparagraph of Article 5(2) of Regulation No 806/2014 provides that the SRB, the Council and the Commission are to be subject to the binding regulatory technical and implementing standards drawn up by the EBA when they have been adopted by the Commission. Those regul