On Wednesday, 8 July, the General Court of the European Union delivered its first four judgments on decisions in which the European Central Bank (ECB), acting as the single supervisor within the euro-area Banking Union, imposes pecuniary penalties on banking institutions.
Case T-203/18. The General Court confirmed the fine of €1.6 million imposed on VQ for a negligent infringement consisting of repurchasing its own shares without the prior permission of the competent authority, in breach of the regulation (575/2013) governing the prudential requirements for banks.
It thus confirmed the existence of the infringement, the proportionality of the imposition of a pecuniary penalty, and approved the terms and conditions for publishing the penalty on the ECB’s website.
See the judgment: https://bit.ly/3gIWHZP
Cases T-576/18, T-577/18, and T-578/18. In these cases involving institutions belonging to the French group Crédit Agricole, the General Court has partially overturned three ECB decisions on the grounds that they were not sufficiently substantiated.
To be sure, the European court has judged that the applicants—Crédit Agricole SA (T-576/18), Crédit Agricole Corporate and Investment Bank (T-577/18), and CA Consumer Finance (T-578/18)—have not demonstrated the unlawfulness of the ECB’s decisions to impose fines of €4.3 million (0.015% of turnover), €300,000 (0.001%), and €200,000 on them for having classified certain capital instruments as being in the highest quality category (CET 1) without permission, in breach of the regulation (575/2013).
However, the General Court has overturned the contested decisions because they impose pecuniary penalties for which inadequate reasons were given.
In its opinion, the ECB is entitled to impose an administrative pecuniary penalty, the maximum amount of which may correspond to 10% of the total annual turnover of the group to which the legal person concerned belongs.
However, it notes that the single banking supervisor does not specify the methodology used to determine the amount of the penalties. The ECB merely notes the seriousness of the infringement, its duration, and the seriousness of the alleged breach and affirms that mitigating circumstances have been taken into account. Nor does it mention the size of the credit institution that committed the infringement in question in the contested decisions, even though (according to the ECB) that factor is particularly relevant in determining the amount of the penalty.
See judgments (in French) in cases T-576/18 (https://bit.ly/2Ckzm1P ); T-577/18 (https://bit.ly/2ZbHQ44 ) and T-578/18 (https://bit.ly/3iK71mf ). (Original version in French by Mathieu Bion)