Luxembourg, 05/10/2004 (Agence Europe) - The ban on earnings from current bank accounts planned under French legislation restricts the freedom of banks from other Member States seeking to set themselves up on French territory; consequently it is illegal and the French government cannot justify it by invoking consumer protection or by encouraging savings, indicated the Court of Justice in a press release. The court is responding to the Council of the French State, which sent it the case concerning CaixaBank France, a subsidiary of Caixa Holding (Spain), which paid customers 2% rates on their current accounts a year to the tune of EUR 1500. The French Banking and Financial Commission had forced the bank to put a stop to this practice but the CaixaBank claimed that the ban on it was contrary to the rules in the treaty. The Court of Justice ruled in its favour. The legal situation of CaixaBank is governed by Community law due to the provisions in the treaty that get rid of all restrictions to the freedom of establishment, all measures that ban, hinder or make less attractive, the exercise of this freedom, explained the court.
Banning earnings from current accounts constituted for companies from other Member States, a serious barrier to the exercising of their activities through the intermediary subsidiary based in France. This ban damaged them in their accumulation of capital from the public and denied them the possibility of providing greater competition to other credit-line establishments already present in France that had an extensive network of agencies, the court decided. In conclusion, this ban on earnings from current accounts exceeded what is necessary for reaching the objectives of consumer protection and encouraging saving.
In defence of its regulation the French government indicated that earnings on accounts increased banking costs, which could see changes to their tariff and service policies, particularly impacting on the principle of no costs being applied to cheques.