The legislation of the European Union prohibits the same person from holding the positions of chairman of the board of directors and of "executive director" of a bank, the General Court of the EU ruled in a judgment returned on Tuesday 24 April (joined cases T-133 to 136/16).
Four regional branches of Crédit Agricole, a French banking group subject to the prudential supervision of the ECB within banking union in the Eurozone, wished to appoint the same person to the positions of chairman of the board and "executive director".
However, the ECB considered that the position of "executive director", within the meaning of the French monetary and financial code and the directive (2013/36) governing the activities of banks, is incompatible with the non-executive position of chairman of the board of directors, the purpose of which is to supervise the actions of individuals exercising executive powers.
The four regional branches brought the matter before the Court, as they considered that the ECB's interpretation was too reductive as it limited the notion of "executive director" to members of the bank's management team holding executive positions.
In its judgment, the General Court finds that the ECB correctly applied the EU law preventing this combination unless an express authorisation has been issued by the competent authorities. In order to promote the proper governance of banks, a balance of powers is necessary within the management body of a bank. Furthermore, the effectiveness of its supervision could be compromised if the chairman of the board of directors, whilst not officially holding the position of managing director, was jointly responsible for the actual management of the bank's activities. (Original version in French by Mathieu Bion)