Case T‑323/22

(published in extract form)

PH and Others

v

European Central Bank

Judgment of the General Court (Fourth Chamber) of 10 July 2024

(Economic and monetary policy – Prudential supervision of credit institutions – Opposition of the ECB to the acquisition of qualifying holdings in a credit institution – Action for annulment – Interest in bringing proceedings – Direct concern – Inadmissibility in part – Reputation and professional competence of the proposed acquirer – Financial soundness – Compliance with prudential requirements – Anti-money laundering and counter-terrorist financing – Proportionality)

1. Action for annulment – Natural or legal persons – Measures of direct and individual concern to them – Direct concern – Decision of the European Central Bank (ECB) refusing to allow a proposed acquirer to acquire a qualifying holding in a credit institution – Action for annulment brought by the company selling shares in the institution concerned – Absence – Inadmissibility

   (Art. 263, fourth para., TFEU)

   (see paragraphs 60-63, 67, 68, 70-72, 75, 76)

2. Economic and monetary policy – Economic policy – Supervision of the EU financial sector – Single Supervisory Mechanism – Prudential supervision of credit institutions – Specific supervisory tasks assigned to the European Central Bank (ECB) – Procedure for assessing acquisitions of qualifying holdings – Criterion requiring that the proposed acquirer of those holdings must be of good repute – Concept – Assessment of the professional competence of the proposed acquirer – Included

   (European Parliament and Council Directive 2013/36, Arts 23(1)(a) and (b) and 91(1))

   (see paragraphs 362-368)

Résumé

Hearing an action for annulment, which it dismisses, against a decision of the European Central Bank (ECB) in which it refuses to allow the acquisition of a qualifying holding in a credit institution, the General Court rules on the novel issue of the standing of the company that is selling such a holding to bring an action for the annulment of a decision refusing to allow the proposed acquirer to acquire that holding. In addition, it rules on the question whether, in the context of the assessment of the good repute of the proposed acquirer, the ECB may assess the latter’s professional competence.

HKB Bank GmbH (‘the target bank’) is a credit institution described as ‘less significant’ ( 1 ) that is under the direct prudential supervision of the Bundesanstalt für Finanzdienstleistungsaufsicht (Federal Financial Supervisory Authority, Germany; ‘BaFin’). On 9 April 2020 and 9 July 2020, PH, PI and PJ (‘the proposed acquirers’) notified BaFin of their intention to acquire a qualifying holding and to exceed holding 50% of the capital and voting rights in the target bank (‘the proposed acquisition’), as a result of the acquisition of all the shares held by Socrates Capital in the target bank. By the contested decision, of which the proposed acquirers were notified on 22 March 2022, the ECB opposed the proposed acquisition, given that the proposed acquirers did not meet the criteria of good repute, financial soundness and compliance with prudential requirements or anti-money laundering and counter-terrorist financing requirements.

Findings of the Court

As regards the admissibility of the action brought before the Court by Socrates Capital and the proposed acquirers, the Court notes that, since one and the same action is involved, provided that PH, PI and PJ have standing, there is no need to examine Socrates Capital’s standing. However, the Court considers it appropriate, in the interests of the proper administration of justice and in view of the particular importance of the question of admissibility raised by the ECB’s plea of inadmissibility, to rule on it.

In that regard, after setting out the rules governing which natural or legal persons are to be accorded standing to bring an action against an act which is not addressed to them, the Court finds that, in the present case, the contested decision was not notified to Socrates Capital. Moreover, no provision required such notification to be given to that applicant as the transferor of the qualifying holding at issue. Since the contested decision is not a regulatory act, the Court is then to examine whether the action, in so far as it is brought by Socrates Capital, fulfils the condition of direct concern.

In that regard, first of all, the Court finds that the purpose of the mechanism for monitoring qualifying holdings is to assess, before such holdings are acquired, the suitability of proposed acquirers wishing to gain access to the banking sector as owners. Therefore, opposition to the acquisition of a qualifying holding in a credit institution must be regarded as not altering the legal position of the company selling such a holding. Although such opposition does call into question the possibility for proposed acquirers to enter into a contract with the seller of a qualifying holding, that opposition does not, however, call into question the seller’s right to enter into a transaction to transfer the qualifying holding, which it may conclude with another potential acquirer. That opposition is merely a refusal to allow the proposed acquirers to gain access to the banking sector as owners.

The Court then moves on to find that that conclusion is borne out by the legal context of the contested decision. Directive 2013/36 ( 2 ) makes no reference either to the publication of the notification of the acquisition of a qualifying holding in a credit institution, or to the possibility of third parties being involved in the administrative procedure, or indeed to the systematic publication of the decision of the competent authority. If the opposition to the acquisition of a qualifying holding is not observed, it provides for penalties only in respect of the exercise of the voting rights corresponding to the shareholding acquired by the proposed acquirers. Thus, in the present case, the contested decision assesses the suitability of the proposed acquirers and not the lawfulness of the sale and purchase agreement.

In addition, the Court observes that the clause in the sale and purchase agreement stipulating that the agreement will not enter into force without the ECB’s authorisation was voluntarily inserted by the parties to the agreement. It is true that a contractual clause may reflect legislation. However, in the present case, that clause reflects legislation which makes the proposed acquirer individually subject to an administrative authorisation the purpose of which is to assess whether that acquirer is suitable to access the banking sector as an owner. Accordingly, the ECB is not ruling on the conformity of any agreement entered into between the proposed acquirers and the seller of a shareholding in a credit institution when it assesses the notification of that acquisition.

Lastly, although the contested decision does constitute an interference with the right to property and the freedom to conduct a business of the proposed acquirers, it cannot be regarded as constituting an interference with the same rights vis-à-vis Socrates Capital. The contested decision does not directly affect Socrates Capital’s right to sell its shares in the target bank.

The Court therefore concludes that the contested decision does not amount to a general prohibition on Socrates Capital selling its shares in the target bank and that, therefore, Socrates Capital is not directly concerned by the contested decision. Consequently, it dismisses the action as inadmissible in so far as it concerns Socrates Capital.

As regards whether it is possible for the ECB, as part of the assessment of the good repute of the proposed acquirers, to assess their professional competence, the Court finds that it is true that Article 23(1) of Directive 2013/36 makes reference, in subparagraph (a), only to the reputation of the proposed acquirer, ( 3 ) whereas subparagraph (b) of that article makes reference to the reputation, knowledge, ( 4 ) competence and experience ( 5 ) of any member of the management body who will direct the business of the credit institution as a result of the proposed acquisition.

However, the Court notes that, according to its usual meaning, to be of ‘good repute’ means being ‘worthy of esteem’ or being ‘known to be respectable’. Such a definition, which refers in particular to public opinion, does not preclude a person’s good repute from being dependant on his or her professional competence. In addition, according to recital 8 of Directive 2007/44, ( 6 ) the provisions of which were reproduced in Directive 2013/36, the application of the criterion concerning the reputation of the proposed acquirer implies the determination of whether any doubts exist as to the integrity ‘and professional competence’ of the proposed acquirer and whether those doubts are founded.

The Court also states that taking into consideration professional competence when examining the reputation of the proposed acquirer is consistent with assessing the ‘suitability’ of the proposed acquirer and with the objective of monitoring the acquisition of qualifying holdings, which is to ensure the sound and prudent management of the credit institution. Given that the holder of a qualifying holding is in a position to influence the credit institution concerned, his or her professional competence contributes to that sound and prudent management of that institution. The Joint Guidelines ( 7 ) support that interpretation, since they state that the reputation of the proposed acquirer should cover his or her integrity and his or her professional competence. Moreover, the wording used in German law in that area does not make it possible to preclude such an interpretation, since the explanatory memorandum to the German statute which transposes Directive 2007/44 states that the reliability criterion consists of determining whether there are doubts as to the integrity ‘and professional ability’ of the proposed acquirer and whether those doubts are well founded.

The Court concludes from the foregoing that the reputation criterion referred to in Directive 2013/36 must be interpreted as including an assessment of the professional competence of the proposed acquirer.

( 1 ) Within the meaning of Article 6(4) of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ 2013 L 287, p. 63).

( 2 ) Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ 2013 L 176, p. 338).

( 3 ) Article 23(1)(a) of Directive 2013/36.

( 4 ) Article 23(1)(b) of Directive 2013/36.

( 5 ) Article 91(1) of Directive 2013/36.

( 6 ) Directive 2007/44/EC of the European Parliament and of the Council of 5 September 2007 amending Council Directive 92/49/EEC and Directives 2002/83/EC, 2004/39/EC, 2005/68/EC and 2006/48/EC as regards procedural rules and evaluation criteria for the prudential assessment of acquisitions and increase of holdings in the financial sector (OJ 2007 L 247, p. 1).

( 7 ) Joint Guidelines on the prudential assessment of acquisitions and increases of qualifying holdings in the financial sector, adopted by the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA), published on 20 December 2016.