Landesbank Baden-Württemberg v Single Resolution Board (T-142/22)

Contents

Judgment of the General Court (Eighth Chamber, Extended Composition)17 July 2024^note(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 2017 ex ante contributions — Obligation to state reasons — Effective judicial protection — Equal treatment — Principle of proportionality — SRB’s discretion — Plea of illegality — Commission’s discretion — Limitation of the temporal effects of the judgment)In Case T‑142/22,Landesbank Baden-Württemberg, established in Stuttgart (Germany), represented by H. Berger, M. Weber and D. Schoo, lawyers,vSingle Resolution Board (SRB), represented by J. Kerlin, T. Wittenberg and D. Ceran, acting as Agents, and by H.-G. Kamann and P. Gey, lawyers,THE GENERAL COURT (Eighth Chamber, Extended Composition),composed of A. Kornezov, President, G. De Baere, D. Petrlík (Rapporteur), K. Kecsmár and S. Kingston, Judges,Registrar: S. Jund, Administrator,having regard to the written part of the procedure,further to the hearing on 7 March 2023,gives the following

JudgmentOnly the paragraphs of the present judgment which the Court considers it appropriate to publish are reproduced here.

1By its action under Article 263 TFEU, the applicant, Landesbank Baden-Württemberg, seeks the annulment of Decision SRB/ES/2021/82 of the Single Resolution Board (SRB) of 15 December 2021 on the calculation of the 2017 ex ante contributions to the Single Resolution Fund concerning Landesbank Baden-Württemberg (‘the contested decision’).…

III.Forms of order sought

20The applicant claims that the Court should:– annul the contested decision, including the annexes thereto;– in the alternative, declare that the contested decision is legally non-existent, in so far as that decision concerns it;– order the SRB to pay the costs.

21The SRB contends that the Court should:– dismiss the action;– order the applicant to pay the costs;– in the alternative, if the contested decision is annulled, maintain the effects of the contested decision until it is replaced or, at the very least, for a period of six months from the date on which the judgment becomes final.

IV.Law…

A.The pleas relating to the lawfulness of the contested decision…

1.The second plea, alleging failure to state reasons…

(a)The seventh part, concerning the retention of the data of the other institutions

239The applicant submits for the first time, in its reply, that the requirements laid down by the Court of Justice in the judgment of 15 July 2021, Commission v Landesbank Baden-Württemberg and SRB (C‑584/20 P and C‑621/20 P, EU:C:2021:601), as regards balancing the SRB’s obligation to state reasons with its obligation to respect the confidentiality of business secrets of the financial institutions concerned, are not applicable in the present case. In accordance with the judgment of 19 June 2018, Baumeister (C‑15/16, EU:C:2018:464, paragraphs 54 and 56), the data of the other institutions on which the contested decision is based no longer constitute business secrets because, since the reference date for the 2017 contribution period is 31 December 2015, those data are more than five years old.

240CRU disputes that line of argument, without, however, calling into question the admissibility of that part of the plea.

241It must be recalled that the very principle of the method of calculating ex ante contributions, as set out in Directive 2014/59 and Regulation No 806/2014, means that the SRB must use data which are business secrets and cannot be included in the statement of reasons for the decision setting the ex ante contributions (judgment of 15 July 2021, Commission v Landesbank Baden-Württemberg and SRB, C‑584/20 P and C‑621/20 P, EU:C:2021:601, paragraph 114).

242In that regard, the SRB provided, in the contested decision, the reasons why the data of the institutions which had been taken into account for the purposes of calculating the 2017 ex ante contributions were business secrets.

243In particular, the SRB observed, in recital 100 of the contested decision, that the institutions’ business secrets – namely, all information about the institutions’ business activity that, if disclosed to a competitor and/or the wider public, could seriously harm the institutions’ interests – were considered to be confidential information. In the context of the calculation of ex ante contributions, the information submitted by the institutions via their data reporting form, which is relied on by the SRB to calculate their ex ante contribution, was considered to constitute business secrets.

244In addition, in recitals 102 to 105 of the contested decision, the SRB stated that it was prohibited from disclosing the institutions’ individual data which formed the basis of the calculations in that decision, whereas it was authorised to disclose the institutions’ aggregated and common data, in so far as those data were in collective form. That being the case, the institutions had, according to the contested decision, complete transparency as to the calculation of their basic annual contribution and their risk-adjustment multipliers for the steps involved in calculating that contribution, as they were defined in Annex I to Delegated Regulation 2015/63, and which related to the ‘calculation of the raw indicators’ (Step 1), the ‘rescaling of the indicators’ (Step 3) and the ‘calculation of the composite indicator’ (Step 5). In addition, the institutions were able to obtain common data which the SRB uses for all risk-adjusted institutions equally for the steps in the calculation relating to the ‘discretisation of the indicators’ (Step 2), the ‘inclusion of the assigned sign’ (Step 4) and the ‘calculation of the annual contributions’ (Step 6).

245However, the applicant disputes that those explanations are sufficient in that, at the date on which the contested decision was adopted, the data of the other institutions were six years old and therefore no longer constituted business secrets, and in that, despite that, the SRB did not provide the reasons why those data were not disclosed.

246In order to assess that argument, it must be observed that, where information that could constitute business secrets at a certain moment in time is at least five years old, that information must, as a rule, on account of the passage of time, be considered historical and therefore as having lost its secret or confidential nature unless, exceptionally, the party relying on that nature shows that, despite its age, that information still constitutes an essential element of its commercial position or that of interested third parties (see, to that effect, judgment of 19 June 2018, Baumeister, C‑15/16, EU:C:2018:464, paragraph 54 and the case-law cited).

247In that regard, it is not disputed that the institutions’ individual data, which the contested decision used to calculate the applicant’s ex ante contribution, were, at the time that decision was adopted, more than five years old.

248However, as the SRB explained in its rejoinder and at the hearing, without being contradicted by the applicant, the position of an institution as compared to the position of its competitors may, in the economic conditions of the banking sector, remain the same or similar for a prolonged period, exceeding five years. Some elements, such as the business model or the activities of such an institution, remain stable in the short and medium term, and therefore an institution which has previously had a high risk profile, as regards data more than five years old, may continue to present a high risk profile at the end of the initial period. Thus, despite its age, that information still constitutes an essential element of the commercial position of the credit institutions. In those circumstances, if such essential data were disclosed in the statement of reasons for the contested decision, economic operators active in the banking sector could use those data to deduce the current commercial position of an institution.

249Thus, the applicant cannot claim that the SRB should have disclosed, in the statement of reasons for the contested decision, the individual data of the other institutions which would enable the calculation of its ex ante contribution to be verified, since, even if those data were six years old, they still constitute an essential element of the commercial position of those institutions.

250That conclusion is not called into question by the applicant’s argument that, in order to discharge its duty to state reasons, the SRB must provide it, in anonymised form, with a list of all of the data of the institutions assigned to the same bin as it.

251First, to impose such a requirement on the SRB would go beyond the requirements imposed by the case-law recalled in paragraphs 217, 220 and 221 above.

252Second, the SRB has argued, without being seriously contradicted on that point, that even a list including anonymised data for a particular bin would risk allowing economic operators active in the banking sector, who are prudent traders, learning the business secrets of certain institutions. In that regard, the applicant has not, in particular, disputed that such traders knew which institutions tended to have high values for certain risk indicators. If they were to obtain lists containing such data each year, they could track the evolution of the risk indicators of those institutions, even though those indicators are composed of commercially sensitive data. Such a risk exists in particular in the case of large institutions and institutions established in Member States in which there are a limited number of institutions liable to the ex ante contribution. It cannot be ruled out that, in such situations, a prudent trader may be able to identify those institutions, even though they have been anonymised. Thus, the SRB cannot be criticised for not having drawn up a list of all of the anonymised data of the institutions assigned to the same bin.

253In the light of the foregoing, the seventh part of the second plea must be dismissed.

(b)The third part, concerning the reasons stated for the annual target level

254The applicant submits that it is impossible to understand, on the basis of the contested decision, the reasons why the annual target level was set at ⅛ of 1.05% of the total amount of covered deposits. Moreover, the supplementary explanations provided by the SRB in point 17 et seq. of Annex III to that decision are not sufficient to clarify how the annual target level was actually determined. In addition, the SRB failed to communicate the forecasted annual target level or its interpretation of the cap mentioned in the second subparagraph of Article 70(2) of Regulation No 806/2014. As the decision fixing the ex ante contributions for the 2022 contribution period shows, the SRB takes the view that it is authorised to increase the annual target level at its discretion by applying a coefficient which is not provided for in the applicable legislation and, in so doing, impose a disproportionate charge on the institutions.

255In response, the SRB contends that it is clear from recitals 50 to 63 of the contested decision and from points 19 to 25 of Annex III to that decision that it provided an adequate statement of reasons as regards the determination of the annual target level for the 2017 contribution period.

256In particular, the SRB determined the annual target level taking into account all the relevant factors, as well as the criteria set out in Article 69(2) of Regulation No 806/2014. Furthermore, as regards the expected growth of covered deposits, the contested decision explained, first, that according to the data provided by the deposit guarantee schemes, the amount of covered deposits increased by 2.2% between 2015 and 2016 and, second, that the projected growth rate for those deposits would be between 1% and 4%. In addition, the way in which potential pro-cyclical effects were taken into account was set out in recital 61 of the contested decision and in point 23 et seq. of Annex III thereto.

257Lastly, the SRB contends that it was possible for the applicant to calculate the final target level estimated in 2017 on the basis of the data available to it, and the failure to disclose the SRB’s interpretation vis-à-vis the 12.5% cap provided for in the second subparagraph of Article 70(2) of Regulation No 806/2014 cannot affect the legality of the statement of reasons for the contested decision.

258As a preliminary point, it must be recalled that, in accordance with Article 69(1) of Regulation No 806/2014, by the end of the initial period, the available financial means in the SRF must reach the final target level, which corresponds to at least 1% of the amount of covered deposits of all of the institutions authorised in the territories of all of the participating Member States.

259According to Article 69(2) of Regulation No 806/2014, during the initial period, the ex ante contributions must be spread out in time as evenly as possible until the final target level mentioned in paragraph 258 above is reached, but with due account taken of the phase of the business cycle and the impact that pro-cyclical contributions may have on the financial position of the institutions.

260Article 70(2) of Regulation No 806/2014 states that, each year, the contributions due by all of the institutions authorised in the territories of all of the participating Member States are not to exceed 12.5% of the final target level.

261In relation to the method of calculating the ex ante contributions, Article 4(2) of Delegated Regulation 2015/63 provides that the SRB is to determine their amount on the basis of the annual target level, taking into account the final target level, and on the basis of the average amount of covered deposits in the previous year, calculated quarterly, of all of the institutions authorised in the territories of all of the participating Member States.

262In the present case, as is apparent from recital 63 of the contested decision, the SRB set the amount of the annual target level at EUR 7161808441 for the 2017 contribution period.

263In recitals 51 and 52 of the contested decision, the SRB explained, in essence, that in order to determine the annual target level, it had taken into account the estimated final target level for 2023, the need to spread the ex ante contributions as evenly as possible during the initial period, as well as the phase of the business cycle and the impact that pro-cyclical contributions might have on the financial position of the institutions. Subsequently, the SRB deemed it appropriate to determine a coefficient based on those parameters and on the financial means already available in the SRF (‘the coefficient’). The SRB applied that coefficient to one eighth of the average amount of covered deposits in 2016 in order to obtain the annual target level.

264The SRB set out the approach followed to determine the annual target level in recitals 54 to 62 of the contested decision.

265In recital 54 of the contested decision, the SRB explained that due account should be taken of the expected evolution of covered deposits during the initial period since, if the covered deposits were to grow over time, setting the annual target level at 1% of the amount of those deposits would not be sufficient to reach the final target level.

266In that regard, the SRB stated, in recital 55 of the contested decision, that the average amount of covered deposits, calculated quarterly, amounted to EUR 5.546 trillion for 2016.

267In recitals 56 to 58 of the contested decision, the SRB presented the forecasted evolution of covered deposits for the six remaining years of the initial period, namely from 2018 to 2023. It estimated that the annual growth rates of covered deposits until the end of the initial period would range between 1% and 4%.

268In recitals 59 to 61 of the contested decision, the SRB presented an assessment of the phase of the business cycle and of the potential pro-cyclical impact the ex ante contributions might have on the financial position of the institutions. To that end, it stated that it had taken into account a number of factors, such as, in particular, the Commission’s GDP growth forecast for 2017 and key indicators for the euro area banking sector, such as the institutions’ solvency, asset quality and profitability. In that regard, and in order not to exacerbate the pro-cyclical effects of the ex ante contributions on the banking industry’s solvency, the SRB considered it appropriate to determine the annual target level based on a covered deposits growth rate lower than the one otherwise identified as the more credible.

269In recital 62 of the contested decision, the SRB concluded that, given the elements of uncertainty surrounding the economic recovery and its potential negative impact on both the expected future growth of covered deposits and the business cycle, as well as the limited amount of data capable of forecasting the future evolution of covered deposits, it was appropriate to adopt a conservative approach as concerns the expected growth rates of those deposits over the coming years, until 2023.

270In the light of those considerations, in recital 63 of the contested decision, the SRB calculated the amount of the annual target level by multiplying the average amount of the covered deposits in 2016 by a coefficient of 1.05% and dividing the result of that calculation by eight, in accordance with the following mathematical formula contained in recital 63 of that decision:‘Target₀ [amount of annual target level] = Total covered deposits₂₀₁₆ * 0.0105 * ⅛ = EUR 7161808441.’

271However, at the hearing, the SRB stated that it had determined the annual target level for the 2017 contribution period as follows.

272First, on the basis of a prospective analysis, the SRB determined the amount of the covered deposits of all of the institutions authorised in the territories of all of the participating Member States, as forecasted for the end of the initial period. In arriving at that amount, the SRB took into account the average amount of covered deposits in 2016, the annual growth rate of those deposits and the number of contribution periods remaining until the end of the initial period.

273Second, in accordance with Article 69(1) of Regulation No 806/2014, it calculated 1% of the forecasted amount of covered deposits at the end of the initial period to obtain the estimated amount of the final target level to be reached on 31 December 2023.

274Third, the SRB deducted from the latter amount the financial means already available in the SRF in 2017 to obtain the amount still to be collected over the remaining contribution periods before the end of the initial period.

275Fourth, the SRB divided the latter amount by the number of contribution periods remaining, to spread it evenly over those contribution periods. The annual target level for the 2017 contribution period was thus set at the amount stated in paragraph 262 above, that is to say, approximately EUR 7.161 billion.

276In order to examine whether the SRB complied with its duty to state reasons as regards the determination of the annual target level, it must be recalled first of all that an absence of or an inadequate statement of reasons is a plea involving a matter of public policy which may, and even must, be raised by the EU judicature of its own motion (see judgment of 2 December 2009, Commission v Ireland and Others, C‑89/08 P, EU:C:2009:742, paragraph 34 and the case-law cited). Accordingly, the Court may, or even must, also take into account failures to state reasons other than those upon which the applicant relies, in particular where those failures come to light in the course of the procedure.

277To that end, the parties’ arguments were heard, in the course of the oral part of the procedure, on all potential failures to state reasons possibly vitiating the contested decision as regards the determination of the annual target level. In particular, in response to a number of questions expressly put in that regard, the SRB described, step by step, the methodology which it had actually adopted in order to determine the annual target level for the 2017 contribution period, as set out in paragraphs 274 to 277 above.

278As regards the content of the duty to state reasons, it is apparent from the case-law that the statement of reasons for a decision taken by an EU institution or body must, inter alia, be free from contradictions so as to enable the persons concerned to ascertain the real reasons for that decision, in order to defend their rights before the court with jurisdiction, and to enable the latter to exercise its power of review (see, to that effect, judgments of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala, C‑413/06 P, EU:C:2008:392, paragraph 169 and the case-law cited; of 22 September 2005, Suproco v Commission, T‑101/03, EU:T:2005:336, paragraphs 20 and 45 to 47; and of 16 December 2015, Greece v Commission, T‑241/13, EU:T:2015:982, paragraph 56).

279Similarly, where the author of the contested decision provides certain explanations concerning the reasons for that decision in the course of the procedure before the Courts of the European Union, those explanations must be consistent with the considerations set out in that decision (see, to that effect, judgments of 22 September 2005, Suproco v Commission, T‑101/03, EU:T:2005:336, paragraphs 45 to 47, and of 13 December 2016, Printeos and Others v Commission, T‑95/15, EU:T:2016:722, paragraphs 54 and 55).

280If the considerations set out in the contested decision are inconsistent with such explanations provided in the course of the judicial proceedings, the statement of reasons for the decision concerned does not fulfil the functions set out in paragraphs 210 and 211 above. In particular, such inconsistency prevents the persons concerned from knowing the real reasons for the contested decision, before bringing an action, and from preparing their defence in that regard, and also prevents the Courts of the European Union from identifying the reasons which served as the actual legal basis for that decision and from examining the compatibility of those reasons with the applicable rules.

281Finally, it must be recalled that, when the SRB adopts a decision setting the ex ante contributions, it must inform the institutions concerned of the method of calculating those contributions (see judgment of 15 July 2021, Commission v Landesbank Baden-Württemberg and SRB, C‑584/20 P and C‑621/20 P, EU:C:2021:601, paragraph 122).

282The same must apply to the method of determining the annual target level, as that amount is of critical importance in the scheme of such a decision. As is clear from paragraph 16 above, the method of calculating the ex ante contributions consists of dividing that amount among all the institutions concerned, with the result that an increase or a reduction in the same amount leads to a corresponding increase or reduction in the ex ante contribution of each of those institutions.

283It follows from the foregoing that, although the SRB is required to provide the institutions, by means of the contested decision, with explanations concerning the method of determining the annual target level, those explanations must be consistent with the explanations provided by the SRB during the judicial proceedings relating to the method actually applied.

284However, that is not the case here.

285It must be observed, first of all, that recital 63 of the contested decision set out a mathematical formula which was presented as forming the basis for determining the annual target level. However, it appears that that formula does not incorporate the components of the method actually applied by the SRB, as explained at the hearing. As is clear from paragraphs 272 to 275 above, the SRB obtained the amount of the annual target level, using that method, by deducting from the final target level the available financial means in the SRF, with a view to calculating the amount still to be collected until the end of the initial period, and dividing the latter amount by the number of contribution periods remaining. However, those two steps of the calculation are not expressed in that mathematical formula.

286Similar inconsistencies also affect the way in which the coefficient of 1.05% was determined, despite the fact that it plays a crucial role in the mathematical formula mentioned in paragraph 285 above. As is apparent from recitals 51 and 52 of the contested decision, that coefficient could be understood as meaning that it is based on the estimated final target level for 2023, on the need for the ex ante contributions to be spread out during the initial period as evenly as possible, and on an analysis of the phase of the business cycle and the impact that those contributions may have on the financial position of the institutions. However, as acknowledged by the SRB at the hearing, that coefficient was determined so as to be able to justify the result of the calculation of the amount of the annual target level, that is to say, after the SRB calculated that amount by following the four steps set out in paragraphs 272 to 275 above and, in particular, by dividing by the number of contribution periods remaining the amount obtained from the deduction of the available financial means in the SRF from the final target level. That approach is not at all apparent from the contested decision.

287It follows that, as regards the determination of the annual target level, the method actually applied by the SRB, as explained at the hearing, does not correspond to that described in the contested decision, and therefore the real reasons in the light of which that target level was set could not be identified on the basis of the contested decision either by the institutions or by the Court.

288In the light of the foregoing, the contested decision must be found to be vitiated by defective reasoning as regards the determination of the annual target level.

289The third part of the second plea must therefore be upheld. In view of the legal and economic implications of the present case, it is, however, in the interests of the proper administration of justice for the other pleas in law raised in the action to be examined.…

Operative part

On those grounds,THE GENERAL COURT (Eighth Chamber, Extended Composition),hereby:

1.Annuls Decision SRB/ES/2021/82 of the Single Resolution Board (SRB) of 15 December 2021 on the calculation of the 2017 ex ante contributions to the Single Resolution Fund concerning Landesbank Baden-Württemberg;

2.Maintains the effects of Decision SRB/ES/2021/82 until the entry into force, within a reasonable period which cannot exceed six months from the date of delivery of the present judgment, of a new decision of the SRB fixing the ex ante contribution to the Single Resolution Fund of Landesbank Baden-Württemberg for the 2017 contribution period;

3.Orders the SRB to bear its own costs and to pay those incurred by Landesbank Baden-Württemberg.

Delivered in open court in Luxembourg on 17 July 2024.