The Court of Justice of the EU (CJEU) on Thursday 4 May annulled a decision of the General Court (case C-389/21 P) giving the French bank Crédit lyonnais the right to exclude, for the purposes of calculating the leverage ratio, all of its exposure to Caisse des Dépôts et Consignations (CDC). The European Central Bank (ECB) had refused to do so, granting the Crédit Agricole SA subsidiary the right to exclude only 66% of its exposures.
This decision was made on 3 May 2019 by the ECB, after a previous judgment of the General Court had rejected the ECB’s first decision, which refused to exclude the entirety of Crédit lyonnais’ exposure to CDC for the purposes of calculating the leverage ratio.
In its judgment, the CJEU held that the General Court exceeded the limits of its judicial review by substituting its own assessment of the risk of fire sales to which Crédit lyonnais was exposed for that of the ECB and that no evidence of errors of assessment by the ECB had been shown.
The General Court had also considered that the ECB had failed to examine “carefully and impartially” all the relevant factors of the situation in question, which the Court rejects in its judgment.
The ECB, which has discretionary powers in this case, had applied a methodology based on the analysis of the credit quality of the French central government, the risk of fire sales and the level of concentration of exposures to CDC.
The Court considers that Crédit lyonnais was unable to put forward sufficient arguments to challenge the ECB’s assessment. It thus confirms that Crédit lyonnais will be able, at most, to exclude 34% of its exposure to CDC for the calculation of its leverage ratio.
See the judgment: https://aeur.eu/f/6q3 (Original version in French by Thomas Mangin)