Cleary Gottlieb successfully represented the Fondo Interbancario di Tutela dei Depositi (FITD) Italy’s deposit guarantee scheme, before the General Court of the European Union in its appeal against the European Commission’s (EC) decision on December 23, 2015, which found that FITD’s voluntary intervention in support of Banca Tercas constituted State aid, granted in violation of article 108(3) TFEU and incompatible with the internal market.
The court agreed with FITD and the other applicants that the EC erroneously considered that the intervention in favor of Banca Tercas was attributable to the State and financed through State resources.
The court held that the EC failed to prove that the intervention was adopted under the influence or effective control of the public authorities. FITD successfully argued that it is a consortium established under private law that acts on behalf of and in the interest of its members and has no organic features tying it to public authorities and its voluntary interventions in favor of distressed banks aim to pursue the private interests of its member banks, avoiding the more onerous economic consequences of a repayment of deposits in the event of a bank’s liquidation and further negative effects for the entire banking sector. The court also found that the Bank of Italy limited itself to exercising its prudential supervisory functions and did not having any power to coerce FITD to intervene.
As to the absence of State resources, the court agreed with FITD that the funds granted to Banca Tercas were provided by FITD’s member banks, in their sole interest, on the ground that the intervention would be less expensive than the reimbursement of depositors.
The Banca Tercas judgment will have important implications for the management of banking crises in Europe, as it recognizes that voluntary interventions to support banks in difficulty, decided and financed by the banking system through a deposit guarantee scheme, may not fall within the scope of State aid rules.