AG’s Opinion on the scope and legal nature of EBA’s recommendations in the context of deposit-guarantee schemes
Today, Advocate General (‘AG’) Campos Sánchez-Bordona delivered his Opinion in Balgarska Narodna Banka (C-501/18), a case stemming from a request for a preliminary ruling by the Administrative Court of Sofia, Bulgaria (Administrativen sad Sofia-grad) concerning the interpretation of Directive 94/19 on deposit-guarantee schemes as well as the legal nature and scope of the recommendations of the European Banking Authority (‘EBA’) in this context.
The questions posed to the Court of Justice must be read in the context of the previous Kantarev case (C-571/16), which concerned the claim for compensation by the Central Bank of Bulgaria (Balgarska Narodna Banka, ‘BNB’) for the delay in reimbursement to the applicant in the main proceedings of a deposit made in the Korporativna Targovska Banka (‘KTB’).
In accordance with the Court of Justice’s instruction, the AG’s Opinion deals only with some of the questions raised by the referring court, which were either not addressed or were addressed from another point of view in the judgment in Kantarev, namely (i) the concept of ‘deposit due and payable’ referred to in Article 1(3)(i) of Directive 94/19; (ii) the legal significance of the recommendations that the EBA issues under Article 17(3) of its founding Regulation 1093/2010, when it comes to the interpretation of Directive 94/19; and (iii) the validity of the EBA’s Recommendation of 17 October 2014, addressed to the BNB and to the Bulgarian Deposit Insurance Fund, on action necessary to comply with Directive 94/19.
Regarding the first issue, AG Campos Sánchez-Bordona suggests that the Court rule that Article 1(3)(i) of Directive 94/19, in conjunction with Articles 7(6) and 10 thereof, must be interpreted as meaning that:
- A deposit not due or payable in accordance with the legal and contractual conditions applicable cannot be taken into account by the competent authority for the purposes of determining whether deposits have become unavailable.
- A deposit not due or payable in accordance with the legal and contractual conditions applicable must be classified as a repayable deposit once the competent authority has determined that the financial institution’s deposits have become unavailable.
- The national court must refrain from applying a national provision which makes the obligation to repay deposits not due or payable but nonetheless forming the subject of a declaration of unavailability subject to the condition of prior withdrawal of the depositary financial institution’s licence. It must also refrain from applying a clause which incorporates the above mentioned national provision that is incompatible with EU law in a bank deposit contract.
As for the interpretative value of EBA’s recommendations issued under Article 17(3) of Regulation 1093/2010, the Opinion considers that any such recommendation is one of the factors which the competent court must take into consideration when interpreting Directive 94/19 and determining whether the breach of EU law is sufficiently serious within the meaning of the case law of the Court of Justice. Nonetheless, according to the AG a recommendation of that kind may be taken into account by the national court only if the content of that recommendation is consistent with the provisions of EU law that it relates to and the national court is required to make a reference for a preliminary ruling to the Court of Justice if it is uncertain about the compatibility of the recommendation with those provisions.
Lastly, and regarding specifically the content of the EBA’s recommendation of 17 October 2014, AG Campos Sánchez-Bordona suggests that the Court rule that it is is contrary to Article 1(3)(i) of Directive 94/19, in so far as it treats the decision of the BNB to place a credit institution under special supervision and to impose a temporary suspension of its obligations as a determination of the unavailability of deposits.
The Opinion is available here.