December 02
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Trajan Shipley
8th October 2021
Banking & Finance

General Court dismisses action challenging ECB decision which was later replaced

In Ukrselhosprom PCF and Versobank v ECB (Cases T‑351/18 and T‑584/18), the General Court has dismissed an action for annulment by the second applicant challenging a decision by the European Central Bank (ECB) withdrawing authorisation to operate as a credit institution.

After being classified as a less significant institution for the purposes of Article 6 of the Basic SSM Regulation, Versobank was placed under the prudential supervision of the Estonian Finantsinspektsioon (FSA), acting as the national competent authority (NCA). The FSA later issued a failing or likely to fail declaration, and recommended the ECB to withdraw its authorisation.

The ECB justified the measure as being adopted after a long and continuous period of deficiencies and breaches of applicable legal provisions on its part, following several on-site inspections of the NCA and, thirdly, that, as that applicant had not complied either with the relevant informal requests or with the precept, it could not come to a positive assessment regarding the future compliance of that applicant with the regulatory requirements imposed on it. However, four months later, the ECB revoked its decision with retroactive effect.

The applicant nonetheless brought an action for annulment of the action (T-584/18) taking the view that the repeal of a measure cannot invariably be equated with annulment by the EU Courts. Another action was brought by Ukrselhosprom PCF (T‑351/18), the main shareholder of Versobank. With regard to the admissibility of the actions, the General Court found the action brought by Ukrselhosprom to be inadmissible, as it ceased to retain legal interest in obtaining the annulment of the decision following its withdrawal. On the contrary, it did find a legal interest in the action brought by Versobank, which was declared admissible but only in respect of such party and not its shareholder.

The General Court also clarified that the ECB replaced its original decision with retroactive effect and did not, as the applicants appear to maintain, merely abrogate that decision for the future. On the substance of the matter, the General Court dismissed all 25 pleas put forward by the applicant, and thereby confirmed the ECB’s replacement of its decision.

The judgment is available here.


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