Case T‑396/21

Deutsche Bank AG

v

Single Resolution Board (SRB)

Judgment of the General Court (Eighth Chamber, Extended Composition) of 17 July 2024

(Economic and monetary union – Banking union – Single resolution mechanism for credit institutions and certain investment firms (SRM) – Single Resolution Fund (SRF) – Decision of the SRB on the calculation of the 2021 ex ante contributions – Obligation to state reasons – Effective judicial protection – Equal treatment – Principle of proportionality – SRB’s margin of discretion – Plea of illegality – Commission’s margin of discretion – Limitation of the temporal effects of the judgment)

1. Economic and monetary policy – Economic policy – Single resolution mechanism for credit institutions and certain investment firms – Ex ante contributions to the Single Resolution Fund – Purpose – Insurance-based logic – Ensuring the provision of adequate financial resources by the financial sector – Determination of the final target level – Dynamic nature of that level – Determination on the basis of a calculation of the covered deposits at the end of the initial period – Whether permissible

   (European Parliament and Council Regulation No 806/2014, recitals 41 and 101 and Arts 69(1) and 76(1))

   (see paragraphs 35-40)

2. Economic and monetary policy – Economic policy – Single resolution mechanism for credit institutions and certain investment firms – Ex ante contributions to the Single Resolution Fund – Final target level – Calculation of that level on the basis of the amount of covered deposits at the end of the initial period – No breach of the principle of proportionality

   (Art. 5(4) TFEU; European Parliament and Council Regulation No 806/2014, Art. 69(1))

   (see paragraphs 48-50, 58, 62, 64, 66, 69, 71)

3. EU institutions – Exercise of powers – Power conferred on the Commission to adopt delegated acts – Scope – Complex assessments and evaluations – Broad discretion – Determination of the methodology for the calculation of the ex ante contributions to the Single Resolution Fund (SRF) – Establishment of the criteria for adjusting those contributions – Judicial review – Limits

   (Art. 290 TFEU; European Parliament and Council Regulation No 806/2014, recital 41; European Parliament and Council Directive 2014/59)

   (see paragraphs 207, 209, 214)

4. Acts of the institutions – Statement of reasons – Obligation – Scope – Decision of the Single Resolution Board (SRB) establishing the ex ante contributions to the Single Resolution Fund (SRF) – Not necessary to include, in that decision, all evidence necessary for verifying the accuracy of the calculation of the contributions – Weighing the obligation to state reasons against the general principle of protection of the business secrets of the institutions concerned – Legality of the provisions concerning the methodology for the calculation of the ex ante contributions to the SRF – Principle of non-disclosure of business secrets – Obligation for the SRB to publish and disclose to the institutions concerned, in a collective and anonymised form, the information relating to the institutions to calculate the ex ante contribution

   (Art. 296, second para., TFEU; European Parliament and Council Regulation No 806/2014; Commission Regulation 2015/63, Arts 4 to 7 and 9 and Annex I; European Parliament and Council Directive 2014/59)

   (see paragraphs 298-310)

Résumé

Hearing an action for annulment against the decision of the Single Resolution Board (SRB) determining the 2021 ex ante contributions to the Single Resolution Fund (SRF) of credit institutions and certain investment firms (‘the contested decision’), ( 1 ) the General Court upholds the action and annuls that decision on the basis of a breach of the SRB’s obligation to state reasons as regards the determination of the annual target level. Furthermore, the Court rules on the scope of Article 69(1) of Regulation No 806/2014 ( 2 ) by defining the dynamic nature of the final target level of the SRF, on the one hand, and by examining its compatibility with the principle of proportionality having regard to the characteristics of the ex ante contributions, on the other hand.

Deutsche Bank AG, the applicant, is a credit institution established in Germany.

Findings of the Court

In the first place, with regard to the scope of Article 69(1) of Regulation No 806/2014, the applicant claimed that that provision must be interpreted as meaning that the final target level is to be determined ‘statically’, that is to say, having regard to the amount of covered deposits when that regulation entered into force and not to the level of those deposits at the end of the initial period.

The Court observes, first of all, that that provision states that, by the end of the initial period, the available financial means of the SRF are to reach at least 1% of the amount of covered deposits of all credit institutions authorised in all of the Member States participating in the Single Resolution Mechanism (SRM) (‘the final target level’). It is apparent from that same provision that the end date of the initial period is not decisive solely for the purpose of determining that date on which the final target level is to be reached, but also for that of specifying the amount of those deposits which is to be taken into consideration with a view to calculating that target level.

Next, the travaux préparatoires for Regulation No 806/2014 ( 3 ) confirm the view that Article 69(1) of that regulation is based on a dynamic approach to the final target level, because that level is to be determined having regard to the amount of covered deposits at the end of the initial period.

Lastly, the Court points out that the need to take account of the evolution of the amount of covered deposits is explained by the objective of raising the ex ante contributions, which is to ensure, according to an insurance-based logic, that the financial sector provides adequate financial resources for the SRM to be able to fulfil its functions. The objective of the SRM is to increase the stability of the institutions in the participating Member States and to prevent the spill-over of any crises into non-participating Member States.

In that regard, it is clear from the travaux préparatoires ( 4 ) that the more the size of the banking sector grows over time, the more the financial resources that must be made available to the SRF will have to increase. An estimate of that size can thus be used to project the amount of the financial means which would have to be provided to the SRF for that fund to be used, in the event of a crisis affecting the banking sector, in order to finance the resolution tools and thus to ensure their effective application. ( 5 ) In addition, the EU legislature opted for an approach whereby the purpose of the amount of covered deposits is to estimate the size of the banking sector and thus to calculate the financial resources which must be made available to the SRF. Viewed from such a perspective, any increase in the amount of covered deposits between the start and the end of the initial period represents growth in the size of the banking sector, which means an increase in the financial means required by the SRF at the end of that period.

Article 69(1) of Regulation No 806/2014 must therefore be interpreted as meaning that the amount of the final target level is to be determined having regard to the amount of covered deposits existing at the end of the initial period. Consequently, the SRB was right to take into account the evolution of those deposits in order to determine the final target level and, subsequently, to determine from that level the annual target level.

In the second place, with regard to the compatibility of Article 69(1) of Regulation No 806/2014 with the principle of proportionality, the Court observes that the EU legislature has broad discretion in determining the method of calculating the ex ante contributions, given the complex assessments which have to be made. Thus, the Court’s review of compliance with the principle of proportionality must be limited to examining whether the measures adopted by the EU legislature are manifestly inappropriate as regards the objective pursued, whether or not they manifestly go beyond what is necessary in order to attain that objective, or whether or not they give rise to disadvantages that are manifestly disproportionate to the objective.

First, with regard to the appropriateness of the rule laid down in Article 69(1) of Regulation No 806/2014, the purpose of which is to provide the SRF with adequate resources to fulfil its function (‘the objective pursued’), the Court takes the view, first of all, that, in order to attain the objective pursued, it fell to the EU legislature to provide the SRF with adequate financial resources, ( 6 ) which correspond to the final target level and are to be estimated having regard to the size of the banking sector. In that regard, the SRB explained that the covered deposits allowed an approximate estimate to be made of the size of the banking sector and thus enabled the financial resources required by the SRF to be calculated. Those deposits constitute commitments made by the institutions and in fact represent the majority of those commitments, at the very least in the case of large institutions. In those circumstances, it is not established that, as a specific category of commitments entered into by the institutions, covered deposits are manifestly inappropriate for estimating the size of the banking sector and thus for calculating the resources required by the SRF.

That conclusion is not called into question by the argument that, in the case of resolution, covered deposits are protected by the deposit guarantee schemes, and therefore growth in such deposits does not entail an increase in the risk covered by the SRF. The amount of covered deposits held by all of the institutions is therefore capable of reflecting the overall evolution of the banking sector. In particular, there is nothing to indicate that any growth in that amount cannot be accompanied by an increase in other commitments made by those institutions, such as non-covered deposits, which are not protected by the deposit guarantee schemes and which entail, for their part, an increase in the risk covered by the SRF.

Similarly, the applicant cannot claim that covered deposits are a manifestly inappropriate measure for calculating the final target level by relying on recital 105 of Regulation No 806/2014. ( 7 ) The mere fact that another criterion may be just as appropriate as that used in the legislation concerned and that the EU legislature states that it is for the European Commission to reassess the application of that criterion in the future does not mean that the criterion used in full knowledge of the facts by the EU legislature is manifestly inappropriate for achieving the objective pursued. In that regard, it does not fall to the Court, in the context of the review of compliance with the principle of proportionality, to determine whether the measure adopted by the legislature was the only one or the best one possible but whether it was manifestly inappropriate.

Next, the Court observes that, in order to enable the SRM to fulfil its functions effectively, the EU legislature provided that the final target level would be calculated on the basis of the amount of covered deposits, as estimated for the end of the initial period. However, by advocating such a method of determining the final target level, the EU legislature did not use a criterion that was manifestly irrelevant for the purpose of reflecting the future size of that sector and thus for guaranteeing adequate funding of the SRF according to the foreseeable situation in that same sector. Furthermore, the Court considers that it is not manifestly inappropriate to take the evolution of covered deposits as a basis for assuming an increase in other commitments made by the institutions and thus to estimate the potential increase in the risk covered by the SRF.

In that context, the Court points out that the argument, based on Articles 428m and 428n of Regulation No 575/2013, ( 8 ) that covered deposits reduce the liquidity risk of the institutions, and therefore growth in those deposits does not give rise to any risk of the SRF being used and thus need not entail any increase in the final target level cannot succeed. The legislation concerning prudential requirements ( 9 ) pursues a different objective from that of the legislation relating to the resolution of institutions. ( 10 ) In those circumstances, those provisions of Regulation No 575/2013 are incapable of establishing that the method of determining the final target level is manifestly inappropriate.

Finally, the fact that taking into account high levels of liquidity in relation to covered deposits when calculating the risk indicator ‘liquidity coverage ratio’ ( 11 ) would lead to a reduction in the adjusting multiplier of the institution concerned is incapable of demonstrating that the development of the amount of covered deposits is manifestly inappropriate for reflecting the evolution in the size of the banking sector and therefore for determining the financial needs of the SRF and, in particular, for estimating the increase in commitments presenting a risk to the SRF and thus for measuring such a risk, which the SRF would be called on to cover in the context of resolution procedures. The Court therefore concludes that the applicant has failed to demonstrate that the method of determining the final target level was manifestly inappropriate for achieving the objective pursued.

Second, the Court finds that the applicant does not explain how the method of determining the final target level ( 12 ) goes manifestly beyond what is necessary to achieve the objective pursued, and that nor does it establish how the methodology based on the covered deposits when Regulation No 806/2014 entered into force would be a less burdensome methodology, which would ensure that the SRF has adequate financial resources.

The same is true of the argument based on the account taken, in the calculation of the final target level, of the reduction in the risk of the SRF being used on account of the eligible liabilities held by the institutions, in accordance with the minimum requirement for own funds and eligible liabilities and the requirement of a loss-absorbing capacity. The applicant does not show that taking account of those liabilities would result in lower charges for the institutions concerned whilst ensuring that the SRF has adequate financial resources, or that the calculation of the final target level in the light of those liabilities, assuming it were to constitute an appropriate measure, would mean lower charges for the institutions concerned than the determination of that target level on the basis of the amount of covered deposits at the end of the initial period.

Third, the Court considers that no specific evidence was presented to it with a view to demonstrating that, having determined the final target level by reference to the covered deposits existing at the end of the initial period, Article 69(1) of Regulation No 806/2014 had given rise to disadvantages for the institutions that were manifestly disproportionate to the objectives pursued by the EU legislature.

( 1 ) Decision SRB/ES/2021/22 of the Single Resolution Board of 14 April 2021 on the calculation of the 2021 ex ante contributions to the Single Resolution Fund.

( 2 ) Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ 2014 L 225, p. 1).

( 3 ) Proposal for a Regulation of the European Parliament and of the Council establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Bank Resolution Fund and amending Regulation (EU) No 1093/2010 of the European Parliament and of the Council (COM/2013/0520 final).

( 4 ) Paragraph 4.3.2 of the explanatory memorandum to proposal COM(2013) 520 final.

( 5 ) In accordance with Article 76(1) of Regulation No 806/2014, read in the light of recital 101 of that regulation.

( 6 ) In the context of the tasks assigned to it by Article 76(1) of Regulation No 806/2014.

( 7 ) That recital reads as follows: ‘The target level of the [SRF] should be established as a percentage of the amount of covered deposits of all credit institutions authorised in the participating Member States. However, since the amount of the total liabilities of those institutions would be, taking into account the functions of the [SRF], a more adequate benchmark, the Commission should assess whether covered deposits or total liabilities is a more appropriate basis and if a minimum absolute amount for the [SRF] should be introduced in the future, maintaining a level playing field with Directive [2014/59].’

( 8 ) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ 2013 L 176, p. 1).

( 9 ) See recital 32 of Regulation No 575/2013.

( 10 ) See recital 12 of Regulation No 806/2014.

( 11 ) Pursuant to Article 6(3)(b) of Commission Delegated Regulation (EU) 2015/63 of 21 October 2014 supplementing Directive 2014/59/EU of the European Parliament and of the Council with regard to ex ante contributions to resolution financing arrangements (OJ 2015 L 11, p. 44).

( 12 ) As it follows from Article 69(1) of Regulation No 806/2014.