Key Cases: Berlusconi, Banco Popular & Gauweiler – Banking & Finance Law
Key Cases in Banking and Finance Law
The Berlusconi Case: Control on Acquisition of Holdings
Facts: Berlusconi (B) acquired 30% of Mediolanum, requiring authorization. Due to prior tax fraud charges, authorities forced Berlusconi to divest, citing failure to meet reputational standards. A conviction was avoided due to the principle of non-retroactivity. B altered the ownership structure.
Issue: Does the national authority have the power to force divestiture, and does this breach the principle of subsidiarity?
Court Decision: The Court determined that acts of EU institutions are reviewed by the ECJ. In a regulated industry, agencies control entrance. The ECB, as the supervisory body for the Banking Union, has direct competence, subject to ECJ review.
The Banco Popular Case: Resolution and Financial Stability
Facts: The ECB determined Banco Popular (BP) was failing and notified the SRB. The SRB and national authority concluded that a sale was in the public interest and ensured financial stability. The Commission’s resolution scheme transferred all shares and capital instruments of BP to Banco Santander for €1.
Issue: Whether BP should be dissolved.
Details: Deloitte’s audit reported potential insolvency. If a bank is important and collapsing, a decision must be made to liquidate or sell, implemented by the national authority. Liquidation conditions include systemic importance and likelihood of collapse. The Council may veto this decision. Once markets stabilize, another valuation is conducted, and if liquidation is more profitable, shareholders and creditors are repaid in priority order.
The Gauweiler Case: ECB and Monetary Policy
Facts: The ECB held a press conference to implement a program of Outright Monetary Transactions (OMT), buying governmental bonds issued by Eurozone states in the secondary market. The ECB stated this aimed at safeguarding monetary policy transmission and singleness.
Gauweiler raised concerns:
- The program aimed to “save the euro” by pooling debt.
- Implementation would encourage harmful economic behavior.
The BVerfG submitted the compatibility of OMT with EU Treaties to the ECJ.
Issue: Does the program constitute an economic policy measure or violate Art. 123(1) of the TFEU, which prohibits monetary financing?
Context: The BVerfG held that constitutional courts retain authority to safeguard constitutional identity and review EU law in exceptional cases.
ECJ’s Decision:
The ECB could enact the OMT program, and it was compatible with EU Treaties:
- OMT was a monetary policy within the ECB’s powers.
- Purchases were in the secondary market, not promoting harmful behavior.
- ECB’s intervention could potentially equal direct purchase of government bonds on the primary market, but OMT was subject to conditions and proportionate to Art. 123 of the TFEU.