Keywords

Summary



Keywords

1 Freedom of movement for persons - Freedom of establishment - Freedom to provide services - Credit institutions - Deposit-guarantee schemes - Directive 94/19 - Legal basis - Article 57(2) of the Treaty - Permissible

(EC Treaty, Art. 57(2); Directive 94/19 of the European Parliament and of the Council)

2 Community law - Principles - Principle of subsidiarity - Statement, in Directive 94/19 on deposit-guarantee schemes, of the reasons establishing the conformity of the legislature's action with the principle of subsidiarity - No express reference to that principle - Breach of the obligation to state reasons - None

(EC Treaty, Art. 190; Directive 94/19 of the European Parliament and of the Council)

3 Freedom of movement for persons - Freedom of establishment - Freedom to provide services - Credit institutions - Deposit-guarantee schemes - Directive 94/19 - Branches established by a credit institution authorized in a Member State prohibited from offering cover higher than that offered by the guarantee scheme of the host Member State - Breach of the obligation to state reasons, of Articles 3(s) and 129a of the Treaty and of the principle of proportionality - None

(EC Treaty, Art. 190; Directive 94/19 of the European Parliament and of the Council, Art. 4(1), second subpara.)

4 Freedom of movement for persons - Freedom of establishment - Freedom to provide services - Credit institutions - Deposit-guarantee schemes - Directive 94/19 - Branches established by a credit institution authorized in a Member State prohibited from offering cover higher than that offered by the guarantee scheme of the host Member State - Whether permissible under existing harmonization - Infringement of Article 57(2) of the Treaty - None

(EC Treaty, Art. 57(2); Directive 94/19 of the European Parliament and of the Council, Art. 4(1), second subpara.; Commission Recommendation 87/63)

5 Freedom of movement for persons - Freedom of establishment - Freedom to provide services - Credit institutions - Deposit-guarantee schemes - Directive 94/19 - Obligation on Member States to accept branches of credit institutions authorized in other Member States into their guarantee schemes - Infringement of the principle of home State supervision - None

(Directive 94/19 of the European Parliament and of the Council, Art. 4(2))

6 Community law - Principles - Proportionality - Scope - Infringement through the requirement in Directive 94/19 that Member States must accept branches of credit institutions authorized in other Member States into their deposit-guarantee schemes - None

(Directive 94/19 of the European Parliament and of the Council, Art. 4(2))

7 Community law - Principles - Proportionality - Scope - Infringement through the establishment by Directive 94/19 of an obligation on all credit institutions to join deposit-guarantee schemes - None

(Directive 94/19 of the European Parliament and of the Council, Art. 3(1), first subpara.)

Summary

8 The Parliament and the Council were entitled to adopt Directive 94/19 on deposit-guarantee schemes solely on the basis of Article 57(2) of the Treaty. That provision authorizes the Community to eliminate - by coordinating the provisions laid down by law, regulation or administrative action - obstacles to the taking-up and pursuit of activities as self-employed persons, while having regard to the public interest aims of the various Member States and adopting a level of protection for that interest which seems acceptable in the Community.

Directive 94/19 clearly abolishes obstacles to the right of establishment and the freedom to provide services. Referring to the objectives of the Treaty, which are formulated in general terms in Article 2 thereof, the Directive aims to promote the harmonious development of the activities of credit institutions throughout the Community by eliminating any restrictions on freedom of establishment and the freedom to provide services, while increasing the stability of the banking system and the protection of savers. Moreover, the effect of the machinery established by the Directive, in particular the compulsory participation of all credit institutions in deposit-guarantee schemes, and the fact that the guarantee schemes of each Member State must cover depositors in branches set up by credit institutions authorized in other Member States, is to prevent the Member States from invoking depositor protection in order to impede the activities of credit institutions authorized in other Member States.

9 Although the Parliament and the Council did not expressly refer to the principle of subsidiarity in Directive 94/19, they complied with the obligation under Article 190 of the Treaty to give reasons, since they explained why they considered that their action was in conformity with that principle, by stating that, because of its dimensions, their action could be best achieved at Community level and could not be achieved sufficiently by the Member States.

10 The export prohibition laid down in the second subparagraph of Article 4(1) of Directive 94/19, in accordance with which the cover enjoyed by depositors in branches established by credit institutions in Member States other than those in which they are authorized may not exceed the cover offered by the corresponding guarantee scheme of the host Member State, was judged necessary by the Council and the Parliament. Those institutions took the view that the level and scope of cover offered by the guarantee scheme should not become an instrument of competition and explained that the market could be disturbed by the fact that branches of some credit institutions offer levels of cover higher that those offered by credit institutions authorized in the host Member State. Thus they correctly set out the reasons for that prohibition, which therefore infringes neither the principle of proportionality nor Articles 3(s) and 129a of the Treaty.

Although the freedom of establishment and the freedom to provide services in the banking sector, which Directive 94/19 aims to promote, must be accompanied by a high level of consumer protection - the objective set out in Articles 3(s) and 129a of the Treaty - no provision of the Treaty obliges the Community legislature to adopt the highest level of protection which can be found in a particular Member State. It follows that a reduction in the level of protection which may thereby result in certain cases through the application of the second subparagraph of Article 4(1) of Directive 94/19 does not call into question the general result which the directive seeks to achieve, namely a considerable improvement in the protection of depositors within the Community, and is not therefore incompatible with the objective set out in Articles 3(s) and 129a of the Treaty.

Moreover, the limited review which the Court may exercise over Community legislative action in an economically complex situation has not shown that, by choosing to avoid, from the very beginning, any market disturbance, the Community institutions were not pursuing a legitimate objective or that the export prohibition was manifestly disproportionate for the credit institutions concerned.

11 The export prohibition laid down by Article 4(1), second subparagraph, of Directive 94/19, pursuant to which the cover enjoyed by depositors in branches established by credit institutions in Member States other than those in which they are authorized may not exceed the cover offered by the corresponding guarantee scheme of the host Member State, cannot be regarded as contrary to Article 57(2) of the Treaty solely on the ground that there are situations which are not to the advantage of the branches of credit institutions authorized in one particular Member State.

When harmonization takes place, traders established in one Member State may lose the advantage of national legislation which was particularly favourable to them. Moreover, although it is true that the `export prohibition' is an exception to the minimum harmonization and mutual recognition which the Directive generally seeks to achieve, the Parliament and the Council were nevertheless empowered, in view of the complexity of the matter and the differences between the legislation of the Member States, to achieve the necessary harmonization progressively.

Finally, inasmuch as it was conceivable that the pursuit of banking business by branches of institutions authorized in a particular Member State would be affected by the obligation to join a guarantee scheme in another Member State, set up in accordance with Commission Recommendation 87/63 concerning the introduction of deposit-guarantee schemes in the Community, Article 4(1) of Directive 94/19 serves to diminish that barrier and, in any event, is a much less onerous limitation than the obligation to comply with different bodies of legislation on deposit-guarantee schemes in the various host Member States.

12 Article 4(2) of Directive 94/19, which requires Member States to include in their deposit-guarantee schemes the branches of credit institutions authorized in other Member States so that they supplement the guarantee already enjoyed by their depositors on account of their affiliation to the guarantee system of their home Member State, does not infringe the principle of supervision by the home Member State.

The principle of home State supervision was not laid down by the Treaty; nor was it laid down by the Community legislature in the sphere of banking law with the intention of systematically subordinating to it all other rules in that sphere. The Community legislature could therefore depart from that principle, provided that the legitimate expectations of the persons concerned were not infringed. However, since the Community legislature had not yet acted in regard to the guarantee of deposits, no such legitimate expectations could exist.

13 Article 4(2) of Directive 94/19, which requires Member States to include in their deposit-guarantee schemes the branches of credit institutions authorized in other Member States so that they supplement the guarantee already enjoyed by their depositors on account of their affiliation to the guarantee system of their home Member State, does not infringe the principle of proportionality.

It is clear from that provision's objective of remedying the disadvantages resulting from disparities in compensation and different conditions of competition, within the same territory, between national institutions and branches of institutions from other Member States, and from the Community legislature's wish to take into account the cost of funding guarantee schemes by setting a harmonized minimum guarantee level, that the Community legislature did not wish to impose an excessive burden on home Member States which did not yet have deposit-guarantee schemes or which had only schemes providing for a lower guarantee and that, in those circumstances, it could not require them to bear the risk associated with additional cover resulting from a political decision of a particular host Member State. It follows that any other solution, such as compulsory supplementary cover by the schemes of the home Member State, would not have enabled the intended aim to be achieved.

Moreover, since that obligation is subject to various conditions intended to ease the host Member State's task - in particular, that State may require branches wishing to join one of its guarantee schemes to pay a contribution and require the home State to provide information on those branches - it does not have the effect of causing an excessive burden for the guarantee schemes of host Member States.

14 Article 3(1) of Directive 94/19, which requires all credit institutions to join a deposit-guarantee scheme, does not infringe the principle of proportionality.

Having regard to the fact that in some Member States there was no deposit-guarantee scheme and to the need for the Community legislature to ensure a harmonized minimum level of deposit guarantee, wherever those deposits were located within the Community, the effect of that obligation, in so far as it makes membership compulsory for only a few credit institutions in one Member State in which there was a voluntary membership scheme, cannot be considered to be excessive.

Moreover, any other approach, such as an obligation to inform customers of any such affiliation, would not have made it possible to achieve the objective of ensuring a harmonized minimum level of guarantee for all deposits.