In the aftermath of the global financial crisis, the European Union took significant steps towards completing a uniform and harmonized market for banking and financial institutions. In order to address many critical issues that emerged during the financial crisis, Member States have created the European Banking Union, based on three pillars: the Single Supervisory Mechanism (SSM), the Single Resolution Mechanism (SRM), and the European Deposit Insurance Scheme (EDIS), which is still under discussion by the European legislator.
In this context, the Court of Justice of the European Union is playing a crucial role in shaping the Banking Union. The present work analyses two critical judgments recently issued by the CJEU: the decisions in Tercas (T-98/16) and Fininvest (C-219/17), which both involved the Bank of Italy and the Italian banking system.
In Tercas, the General Court of the European Union decided on the actions for annulment brought against the Commission's Decision that deemed the measures taken in 2014 by the Italian Fondo Interbancario di Tutela dei Depositi (FITD) in favor of Banca Popolare di Bari (BPB) to support its acquisition of Cassa di Risparmio di Teramo (Tercas), a regional bank placed under extraordinary administration, to be State aid. In this respect, the EU competition authority's opposition to the use of the deposit guarantee scheme (DGS) was critical for the Italian Republic because, at the time of the decision, four regional banks - Banca dell'Etruria, CariFerrara, CariChieti and Banca delle Marche - were in the process of being bailed out by the FITD, but where ultimately instead put under resolution.
The judgment is certainly relevant for many reasons. First, the ruling represents a benchmark in the use of a DGS after the introduction of Directives 2014/59/EU and 2014/49/EU as it implicitly defines the principles according to which a national DGS can intervene in a banking crisis without breaking EU laws on State aid. Secondly, the decision clarifies the role played by the Bank of Italy in the operation carried out by the FITD for the benefit of Tercas.
In its decision, the General Court overruled the interpretation presented by the European Commission in its decision of 23 December 2015, by validating the principle according to which a DGS's preventive and alternative measure do not constitute State aid, unless the Commission adequately proves that the public authorities exercises actual control over the operations. Therefore, the ruling is a confirmation of the important role assigned to the national schemes under the new framework for managing banking crises, as designed by the European legislator in Directive 2014/49/EU.
On 29 May 2019, the European Commission appealed the judgment. Thus, the Court of Justice will have the opportunity to give its final say on the case.
In Fininvest, the Court of Justice's Grand Chambre faced the issue, raised by a preliminary ruling issued by the Italian Council of State, whether actions against preparatory acts adopted by a National Competent Authority (NCA) in the context of SSM's common procedures should be brought before domestic or European courts.
The Court of Justice found that NCA's preparatory acts relating to an ECB decision are non-binding, therefore the European courts have exclusive jurisdiction in determining whether the legality of the ECB's supervisory decisions is affected by any defects in the preparatory acts issued by the NCA. Thus, alleged illegitimacies related to NCA's preparatory acts shall be claimed only by challenging the ECB's final decision before the CJEU.
The decision is particularly important because it is the first time the CJEU's criteria on the allocation of jurisdiction over composed proceedings (i.e. those proceedings taking place both at EU and national level) are applied to the SSM's common procedures. In this sense, the ruling contributes to the process of refining the SSM's architecture and the interplay between European and national authorities in the context of banking supervision.
