The General Court of the European Union has rightly ruled that measures adopted by a private consortium of Italian banks to support one of its members are not imputable to the Italian State; this was the judgment handed down in the Court of Justice on Tuesday 2 March (Case C-425/19P).
On appeal by the European Commission, the Court of Justice thereby confirms the judgment of the General Court of March 2019, which had annulled a Commission decision of December 2015 under which a preventive intervention in support of the Fondo Interbancario di Tutela dei Depositi (FITD) – a mutual consortium governed by private law – in favour of the member Banca Tercas, constituted unlawful State Aid under the Treaty on the Functioning of the EU (Article 107) (see EUROPE 12219/23).
The FITD fund is obliged to intervene under the statutory deposit guarantee provided for in case of the compulsory liquidation of one of its members. It also has the power to intervene in a preventive capacity to support a member that is placed under special administration, provided that prospects of recovery exist for the bank being given support, and that there is a lesser burden to be expected compared with the burden incurred by the intervention in relation to compulsory liquidation.
This was the case for the support given by the FITD to Tercas, a private equity bank under special administration by Banca d’Italia and in which Banca Popolare di Bari had expressed an interest in investing on condition that FITD would intervene in the transaction.
The Court of Justice recalls that, first of all, in order for advantages to be classified as State Aid, they must be granted directly or indirectly through State resources and be imputable to the State (Article 107 TFEU).
According to the European judge, the evidence put forward by the Commission to demonstrate the influence of the Italian public authorities on the FITD did not allow the measures adopted for the benefit of Tercas to be imputed to the Italian authorities. In addition, the Court of Justice adds that among the evidence resulting from the case and the context, the absence of a link of a capital nature between the FITD and the State is clearly relevant in that regard.
Furthermore, the Court of Justice rejects the Commission’s argument that there is a risk of circumventing the BRRD Directive (2014/59), which provides for the resolution of failing banks within the euro area banking union. In the Commission’s view, the refusal to impute to the Italian State authorities the intervention of the FITD for the benefit of a private equity bank, entailed a risk of circumventing the aforementioned Directive (Article 32), which provides for the initiation of a resolution procedure where a credit institution requires extraordinary public financial support, amounting to State Aid.
In that regard, the Court of Justice notes that it is still possible for a measure taken by a deposit guarantee scheme to be classified as State Aid capable of triggering a bank resolution procedure.
See the judgment of the Court: http://bit.ly/3kBydVo (Original version in French by Mathieu Bion)