The nature of DGS after the Tercas case: is the issue really solved?

by Giorgia Marra – Sarah-Louisa Bölter [1]

ABSTRACT: The recent evolution of the DGS discipline as part of the third pillar of the European Banking Union and the recent Tercas case law brought new light on the issue of the DGSs’ nature for the purposes of the State aid regulation. In the Italian legal system, despite the outcome of the abovementioned case law, the issue is still open. The aim of this paper is to discuss the main controversial aspects emerging from the current framework.

SUMMARY: 1. The nature of the DGS after the Tercas case. – 2. The legal nature of the DGSs. Supervision. – 3. Contributions and interventions after the 2016 reform as a consequence of the Tercas case. – 4. The public mandate. – 5. Consequences of the insolvency of the DGS. – 6. The «de facto» monopoly. – 7. Comparison with social insurance under Italian law. – 8. Conclusions.

1. The nature of the Deposit Guarantee Schemes (DGS) and their interventions is still a discussed topic in the European Union as it is in Italy, not only to understand their institutional organization, but mainly for the purpose of the State aid assessment (Articles 107 ff. TFEU).

Indeed, although the private nature of the Italian DGSs is often highlighted, there are indications that suggest that the issue cannot be considered solved. Reasons can be found both in the recent Tercas case law, and in the discipline reformed by the Directive EU/2014/49 (on deposit guarantee schemes – DGSD), in the context of the European Banking Union.

In the Tercas case the General Court (judgement of March 2019 – joined cases T 98/16, T 96/16 and T 198/16) annulled the Commission’s decision (EU/2016/1208 of the 23 December 2015) which had declared the voluntary intervention by the Italian FIDT (Fondo Interbancario di Tutela dei Depositi) unlawful as State aid not communicated and authorized by the Commission, ordering their recovery[2].

The ruling was commonly considered to be in favour of the private nature of the DGS, but, while resolving the issue at hand, it did not generally define the position of the DGS between the public and the private sector[3].

In fact the General Court mainly based its conclusions on the Commission’s failure to achieve the required burden of proof, which is more severe for private DGSs than for public ones, and affirmed the need to proceed on a case by case basis. Therefore, the Court is still able, in its future case law, to conclude otherwise also on the Italian system, whether the Commission will reach the required standards[4].

The approach is consistent with the DGSD (see recital 16) and with the Commission Communication of 2013[5]. The latter (paragraph 63) states that, while DGS interventions for reimbursement of depsitors do not constitute State aid, the use of such funds «or similar funds» «to assist in the restructuring of credit institutions» may constitute State aid, even if they come from the private sector «to the extent that they come within the control of the State and the decision as to the funds’ application is imputable to the State»[6]. Therefore the Commission shall still evaluate these interventions taking into account the characteristics of the DGS and the intervention[7].

Following the appeal by the Commission, the judgement of the Court of Justice (Grand Chamber) of 2nd March 2021 confirmed the first decision, which however remains the primary reference. In fact, the second decision, while retracing the legal reasoning, is mainly based on procedural arguments. In a nutshell, on the one hand, the General Court correctly distinguished the burden of proof for the Commission; on the other hand, the appeal shall not focus on the analysis of the facts, except in the case where the distortion is obvious from the documents on the Court’s file (see Article 58 of the Statute of the Court; paragraph 52 of the judgement).

The Court of Justice also stated, recalling the conclusions of the Advocate General (paragraph 125)[8], that still some of the interventions implemented by DGS can be qualified as State aid through a case-by-case assessment (paragraph 78).

Furthermore, the introduction of an increasingly penetrating discipline affected the entire banking (and financial) sector, particularly following the 2008 crisis, as the financial stability is now considered a fundamental regulatory goal of the European Banking Union.

The evolution of the DGS’s framework from a phase of deregulation, in which the DGS operated only on the basis of their bylaws and the general civil law provision, to a public law discipline shall be seen in the abovementioned context: first through the minimum harmonization Directive 94/19/EC (amended by Directive 2009/14/EC) and then through the more pervasive Directive 2014/49/EU (DGSD), aimed at ensuring adequate and harmonized standards of protection among various Member States. The result was the deepening of the public aspects that were already highlighted in the doctrine, in a hybrid system[9].

In this context shall also be read the progressive «change of course» of the Commission’s decision, which before the 2008 crisis adopted a softer approach, in the evaluation of the DGS interventions as State aid, as happened in the emblematic Sicilcassa case[10]. The Commission justified this change precisely with the introduction of the Communication containing the technical rules and principles considered in the assessments in the light of the speciality of the banking sector (paragraph 146 of the Commission Decision).

In the following paragraphs, the main aspects of the Italian framework on DGSs will be addressed: the organization and supervision of the DGS; contribution and intervention systems; the regulatory gap on the consequences of the insolvency of the DGS; and the persistent position of «de facto monopoly» of Italian DGSs. The defined system will be then briefly compared with the Italian social insurance.

As the scenario is still not clear, and can raise further doubts in the future, due to the strong interconnection between public and private elements, a more clear approach from the European legislator, in order to ensure a “level playing field”, is desirable.

2. The DGSD left to the discretion of the Member States whether to establish public or private DGS. The Italian Consolidated Banking Act opted for private nature (Article 96 paragraph 4), in line with the tradition of the DGS operating in Italy, but has not further defined their nature.

In the Italian system, the two DGS currently operating, the FITD – Fondo Interbancario di Tutela dei Depositi –, one of the main players of the Tercas affair, and the FGDCC – Fondo di Garanzia dei Depositanti del Credito Cooperativo – define themselves in the bylaws as private consortia[11].

In lack of further clarifications, they are to be considered as consortia with external activity (consorzi con attività esterna), pursuant to Article 2612 ff. of the Italian Civil Code[12]. There is no provision for the distribution of profits, nor the pursuit of a profit purpose (see below, § 7)[13].

The private nature is sided by a publicistic relevance due to the involvement of the supervisory Authority. This responds to the general provision of the DGSD according to which the Competent Authorities «shall supervise the DGSs […] on an ongoing basis as to their compliance with the Directive» (Article 4 paragraph 7)[14]. In Italy, DGS are in fact subject to supervision by the Bank of Italy, with powers partly borrowed from the regulations of the credit institutions. Among its competences, the Bank of Italy: a) recognizes the DGS and approves their statutes; b) verifies that the DGS have appropriate procedures and systems to select the type of intervention, implement it and monitor the risks in the event of a statutory provision that allows alternative interventions to resolution (to overcome the failure of the credit institution); c) supervises compliance with the regulations, having powers (by express reference) pursuant to Article 51 paragraph 1 (for information supervision), Article 52 (communications from the board of statutory auditors and the persons in charge of the legal  audit of the accounts), Article 53-bis paragraph 1 letter a), b) and c) (to intervene, in particular, summoning management, statutory auditors and directors, order the convocation of the collegial bodies and summon them directly); d) verifies that the protection offered by foreign DGSs, to which Italian branches of non-EU banks belong, is equivalent to the ones offered by Italian ones; e) coordinates with the Autorities of other Member States for the adhesion of foreign branches to the Italian DGS; f) jointly approves with the said Authorities the establishment of cross-border DGS or the merger between different systems of different States and participates in their supervision; g) informs the DGS without delay if it finds that a member has critical issues such as to activate interventions (Article 96-ter); h) to subjects who perform administrative, management and control functions, applies Article 26 except for paragraph 3 letter c) and e) (Article 96-bis.3); i) verifies the existance of the required element in order to implement an intervention pursuant to Article 96-bis par. 1-bis letter d) (see below, § 3). Other powers and competences can also be given to the Authority by the bylaws of the DGS, as happened in the FITD case.

In the Tercas case, the Commission tried to prove a de facto moral suasion action by the Authority through presumptive elements, which, though, were not deemed sufficient by the Court in order to prove the existence of such control[15]. As a result, the Commission stated on appeal that it thus would be forced to a probatio diabolica (paragraph 45).

The argumentative fil rouge is therefore closely connected with procedural aspects: the Court requires that there be «direct» proof of control, not only deriving from presumptive elements.

3. A fundamental index regards the contribution and use of these resources, since the regulatory regime and the practices developed in Italy are a consequence of the aspects highlighted in the Commission’s decision and in the following Tercas case law[16].

Indeed, at the time of the Commission’s decision, the 2014 directive had not yet been implemented, an action that is only due to Legislative Decree No. 30 of 2016, three years before the General Court’s ruling. Moreover, only in 2014 the European regulations expressly provided for alternative interventions, allowing the use of the same financial resources for the reimbursement of depsitors for this purpose[17].

The Commission’s complaints included the use of resources (so-called «financial means») tied to a public mandate (see below, § 4) and under control by public Authorities, on the assumption that «all financial means by which the public authorities actually support undertakings fall under State aid control, irrespective of whether those means are permanent assets of the public sector» and that «[c]ompulsory contributions that are mandatory and managed and apportioned in accordance with the law or other public rules imply the presence of State resources, even if not administred by the public authorities» (paragraph 112 of the decision)[18]. The compulsory membership and the «exclusive» position of the FITD contributed to this construction (see below, § 6).

Pending the trial of first instance, this finding led the Italian legislator to allow the DGS to create a plurality of separate assets. Today the Italian Consolidated Banking Act envisages five methods of intervention: a) reimbursement of depositors or so called pay-out (Article 96-bis paragraph 1-bis letter a); b) resolution financing pursuant to Article 109 BRRD (Article 96-bis paragraph 1 letter b); c) alternative interventions in compulsory administrative liquidation (Article 96-bis paragraph 1-bis letter c); d) preventive interventions to overcome the failing or likely to fail situation (Article 96-bis paragraph 1-bis letter d); e) interventions financed on a voluntary basis «without prejudice to the provisions of Article 96-bis paragraph 1-bis letter d) and for the same purposes indicated therein» (Article 96-quater.4)[19].

While the first four are financed through the financial means referred to in Article 96.1[20], the latter is implemented «through resources paid on a voluntary basis», to which applies, by express reference, Article 96.1 paragraph 5, i.e. the regime of patrimonial segregation.

On the one hand, the financial means consists in segregate assets, bound to the public mandate, and made by contributions mainly regulated by the law (Article 96.2); on the other hand, the resources paid on a voluntary basis, which also constitute segregate assets, are not subject to public rules on contributions but are determined according to a private regime. For example, seems possible to admit that they can be conferred by members in a non-proportional measure, except for what will be said below.

Article 11 DGSD, on the other hand, refers only to interventions through financial means[21]. In other words, the Directive does not dictate a clear division between the sources of financing, but generically refers to the so-called «financial means» which can be used for mandatory interventions and, in the presence of specific conditions, for the purposes of preventive interventions (Article 11 paragraphs 3 and 5), and alternative ones (paragraph 6). Therefore, the Italian regime (Article 96-quater.4) supports an autonomous and private organization (also connected to public purposes) other to those resulting from the European regulations, exceeding the scope of the latter.

In practice, a consequence of the Commission’s decision was the so-called Schema Volontario di Intervento (Voluntary Intervention Scheme) in the form of an unrecognized association (associazione non riconosciuta – pursuant to Articles 14 ff. of the Italian Civil Code) established within the FITD[22]. In this way, not only segregation of the assets is granted, but the Scheme could also be considered as a different subject.

The member of the FITD can adhere to the association on a voluntary basis; they can withdraw at any time, or (it would seem, not as an automatic condition) be excluded if they cast a negative vote for two consecutive intervention proposals approved by the meeting. Members are also obliged to pay contributions according to the resolutions of the meeting and the criteria provided by the bylaws of the FITD, and interventions can also be carried out in favour of banks non participating in the scheme.

Nevertheless, the scheme is deeply connected to the FITD, as it exploits the same structures as the FITD; also due to the participation of its bodies (president; board of statutory auditors; general manager); and because it is governed by the same bylaws, approved by the Bank of Italy (see FITD bylaws).

In conclusion, the reform and the newly established organization are consistent and seem to confirm the «accounting criterion» later adopted by the Court on the public nature of resources (Article 107 paragraph 1 TFEU), distinguishing between funds related to compulsory contributions and «advances», provided by the then bylaws of the FITD (paragraph 152), employed in the voluntary intervention in favour of Tercas.

In other words, the use of resources other than the financial means is a fundamental element to exclude the public nature. On the contrary, the voluntary interventions carried out with the use of the financial resources could constitute State aid[23].

4. The DGSs hold a public mandate to protect depositors and the trust they place in the banking system (Article 96-bis of the Italian Consolidated Banking Act, and, indirectly, Article 47 of the Italian Constitution) and constitutes an important element of the regulatory safety net aimed at ensuring financial stability of the system (recital 3 DGSD), as well as serving as the third pillar of the European Banking Union[24].

On the limits of the public mandate, the Court stated more clearly that: the support interventions have a different purpose from the one of the reimbursement of deposits in the event of compulsory administrative liquidation (which now can be assimilated to those pursuant to Article 109 BRRD) and do not constitute the execution of a public mandate[25]. It would be limited to such interventions and to the quantitative treshold of 100.000 euros, while the others would be left to the statutory autonomy and to the decisions of the consortium members.

However, the DGSD has also provided for a quantitative limit to these interventions (previously only statutory), imposing the least cost criterion, according to which the resources used for alternative interventions cannot exceed those that the DGS should support in the event of repayment of deposits[26].

Furthermore, despite the voluntary nature of these interventions (which may not be provided by the bylaws), the observations made in the previous paragraph on the functionalisation of assets remain valid.

5. The consequences of the DGS insolvency were not addressed in the Tercas case law, nor in the regulatory discipline, and they are only sporadically discussed by the doctrine. Nevertheless, the topic could be relevant for the purpose of the qualification of the DGSs. The susceptibility of the DGS to go under an ordinary bankruptcy procedure would confirm its nature as a private entity operating on the market. Otherwise public entities could be excluded from bankruptcy procedures within different perimeters, or subjected to special procedures. Thus the legislator’s choice shall be contextualized within each legislative framework but could still be an important index to be considered.

Without prejudice to the fact that this is a remote eventuality, in light of the additional financing methods to ordinary contributions, the DGSs, especially in the context of systemic crises, could find themselves in a condition of insolvency according to bankruptcy law, or a FOLF (failing or likely to fail) situation according to the special regulation provided for banks (different and broader than insolvency – see Article 36 of Legislative Decree 180/2015). It is indeed a consolidated opinion that for depositors, reimbursement (within the limits of the law) is now an enforceable right, for which they could then also take legal action.

The presence, among the powers attributed to the National Designated Authority (for the Italian case, the Bank of Italy), functional to ensuring «the ability to guarantee systems to carry out the repayments of protected deposits» (Article 96-ter paragraph 1; see also Article 2 paragraph 1 n. 18 DGSD[27]), of those provided on banks suggests that the DGS may be included in the banking system and, because of that, they may be subject to its special procedures (in Italy, extraordinary administration, compulsory administrative liquidation, resolution).

As it is common knowledge, credit institutions, although considered as private entities, are treated differently than other firms, due to the general public interest underlying their market, which justifies a different administrative regulation. Indeed, the assimilation of DGS to banks subjected to special administrative procedure in the event of a crisis would place them in a system characterized by the well-known needs of financial stability, which may require, albeit to a limited and regulated extent, public interventions.

However this solution seems difficult to achieve due to the legislator’s silence and seems more easy to imagine that this scenario would be overcome through public interventions in support of the banks (or the DGS itself) in order to avoid or limit the DGS’s default.

On the other hand, Recital 45 DGSD states that the directive «should not result in the Member States or their relevant authorities being made liable in respect of depositors if they have ensured that one or more schemes guaranteeing deposits or credit institutions themselves and ensuring the compensation or protection of depositors under the conditions prescribed in this Directive have been introduced and officially recognised»[28].

It would seem, however, that the purpose of the european legislator is to exlude claims against the Member States for “direct” compensation rather than prevent them from intervening in support of DGS in crisis.

As already mentioned this is a solution, which is not reflected in the discipline at the moment and can be considered only as a theoretical exercise.

6. Both the directive (Article 4) and the Italian Consolidated Banking Act (Articles 96; 96-ter; 96-quater.3) allow Member States to recognize more than one DGS. Banks can also join DGSs of another Member State, without prejudice to the assessments by the Bank of Italy, to which this intention shall be communicated at least six months prior (Article 96-quater.3). Therefore the system is competition-oriented.

However, the Italian system traditionally and currently shows a de facto monopoly situation (see also point 137 of the Commission decision). Banks other than those of cooperative credit[29] could, in the Italian market, adhere only to the FIDT: as the two DGS currently operating in Italy (the FGDCC, and the FITD) address (except for a partial overlap) to two different market segments.

Moreover, de facto monolpolies can be considered as equivalent to legal ones, as can be turned into them, according to Article 43 of the Italian Constitution[30].

Due to the mandatory establishment of the DGS, the mandatory adhesion and contribution, the system could essentially consist in a form of taxation where the collected contributions would be left to be managed by a private entity while remaining substantially public. The argument was considered by the Court to be «largely theoretical» and which «has no bearing on the measures at issue» (paragraph 160), therefore, in order to assess State control.

However, a similar finding was accepted with reference to the Single Resolution Fund, where the issue of the insufficiency of Article 114 TFEU as a legal basis for the centralization and mutualization of resources could have violated the fiscal sovereignty of the Member States. This led to the adoption of the Intergovernmental Agreement (IGA) of 2015[31].

7. From the brief analysis above emerges a very peculiar system, nevertheless, it is possible to find a similar model in the compulsory insurance. In fact, the DGSs carry out both the transfer of risk and mutuality, typical elements of the insurance phenomenon[32]; membership and contributions are mandatory. The latter, although being a reserved activity (like the entire insurance sector), remains subject to a competitive regime. However, the circumstance that the current Italian DGS market is a monopoly, suggests further narrowing the analysis.

In the Italian legal framework, a model of compulsory insurance in a monopoly/exclusive regime is to be found in the so-called social insurance (Article 1886 of the Italian Civil Code; Article 38 of the Italian Constitution), which includes insurance against accidents at work, traditionally a monopoly of INAIL (National Institute for Accident Insurance on Labor – Istituto Nazionale Assicurazione Infortuni sul Lavoro) pursuant to the Consolidated Act No. 1124 of 30th June 1965, Article 126. In the debate on the «opening» of the market emerged some characteristics connected to its «social purpose»[33]: a) a public purpose of a constitutional relevance is pursued (Article 38 of the Italian Constitution); b) the payment of benefits is independent from the payment of contributions and any liability of the employer; c) the economic burden is divided through a method that implies the non-exclusive proportionality of the contributions to rsiks, and income to benefits, in implementation of the principle of solidarity[34].

The two cases cannot be fully assimilated (e.g. with regard to insolvency), since INAIL is a public body, however these indices can also be identified in the context of the DGS.

The first element occurs as follows: while social insurance finds its legal basis in Article 38 of the Italian Constitution, the constitutional basis for the DGSs, that stigmatizes and contains the public intervention and justifies the mandate, is Article 47 of the Italian Constitution.  As a business profit is not pursued the social purpose is the solely pursued one: the financial means are invested in low-risk and sufficiently diversified assets (Article 96.2 paragraph 6), and in the FITD and FGDCC bylaws it is specified that the fruits contribute to the achievement of the objective level (respectively, Articles 24 and 25).

The second element also occurs. The various financing tools under a), b) and c) can be implemented even in the event of unpaid contributions. An exemption is only made for lett. d) for which, as a legal requirement, the beneficiary shall be able to pay extraordinary contributions pursuant to Article 96.2 paragraph 3. In the other cases, only «exceptionally serius» breach of the obligations deriving form the membership (including the contribution), could lead to the exclusion of a member (Article 96-quater), which in turn implies the revocation of the authorization to banking activity (paragraph 4)[35]. At the same time the interventions are independent from the liability of the bank or its representatives.

Finally, the various forms of interventions, with the exception of the one under letter e), are financed with the financial means pursuant to Article 96.1 where the links between contribution and disbursement, and between contribution and risk are not «exclusive» as the calculation results from various factors and seems to be mainly related to the achievement and manteinance of a target level[36]; the resources can also be supplemented, first of all in the event of insufficient ordinary contributions for the repayment of depositors (Article 96.2 paragraph 3), with extraordinary contributions as well as with other forms of financing (loans between guarantee systems pursuant to Article 96-quater.1). Moreover, the Bank of Italy is empowered to order the deferral of contributions in favour of a member for a maximum period of six month (and renewable), in case the payment jeopardizes its liquidity or solvency. The disbursements are instead limited to a maximum amount for mandatory interventions (100.000 euros), independent of the amount of the deposits, and for other interventions by the principle of least cost. Thus, those combined elements suggest the existence, even if not declared, of a solidarity regime.

The similarities, however, are mostly limited to the operations of the DGS related to the use of financial means. On the other hand, the similarities are fewer in case of the establishment of separate systems of voluntary intervention, where the private component prevails, without prejudice to the previous observations (see above, § 3).

8. From what has been discussed a rather heterogeneous picture emerges as the public law elements are strongly intertwined with the private nature.

Furthermore, an univocal qualification is still difficult due to the lack of a comprehensive discipline, as the latter stays silent on profiles of enormous importance, such as the crisis of the DGS,  the answer still being uncertain.

Therefore, it seems possible to conclude that the issue still remains unsolved today, both in light of a general qualification, and of the State aid framework, having into account the peculiarities of the discipline that makes it difficult to qualify them in the context of the «categories» of the Italian legal system.

At the same time, the potential heterogeneity of the DGSs could lead to diversified treatements between different Member States, with different consequences also for the management of bank crises.

This is an outcome which the european legislator already intended to avoid through a deeper harmonization of the discipline (for instance, by imposing a uniform ceiling on interventions), and is thus to be considered in future rethinking of policies[37].

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[1] Even if jointly drafted, paragraphs 1, 2, 3, 4, 6, 7, 8 of this article are attributable to Giorgia Marra while paragraph paragraph 5 is attributable to Sarah-Louisa Bölter.

[2] On the 30^th of April 2012 Cassa di Risparmio della Provincia di Teramo S.p.A. (Tercas) was put under the special administration procedure pursuant to Articles 70 ff. of the Italian Consolidated Banking Act. In October 2013, Banca Popolare di Bari S.C.p.A. (BPB) manifested an interest in underwriting a capital increase in Tercas, and started the negotiations with the extraordinary commissioner, appointed by the Bank of Italy. BPB intervention was subject to a due diligence and to the condition that FITD covered Tercas’ equity deficit. After a failed first attempt, in July 2014, the Bank of Italy authorized a new FITD intervention, under different terms, in favour of Tercas, unanimously approved by the FITD. After the capital increase reserved to BPB, on 1^st October 2014, the extraordinary administration regime was lifted, and new corporate bodies were appointed. In April 2015, the European Commission started a procedure under Article 108 paragraph 2 TFEU as the FITD intervention had not been notified. The Commission found the four conditions required by Article 107 TFEU to be satisfied in respect of the FITD intervention in Tercas, thus Commission Decision EU/2016/1208 of 23^rd December 2015 (on State aid granted by Italy to the bank Tercas (Case SA.39451 (2015/C) (ex 2015/NN)), considered the measures as unlawful and incompatibile with the internal market, being in breach of Article 108 paragraph 3 TFEU, and ordered their recovery. See paragraphs 3 – 32 of the General Court’s decision. For an overview on the case and on the topic in general, MARRA, The Tercas Case, in Commentaries and Cases on Italian Business Law, Sacco Ginevri (edited by), Cedam, 2021, II ed.

[3] On the Tercas case, and on the nature of the DGS in general, see also, in the Italian doctrine, ARGENTATI, Sistemi di garanzia dei depositi e crisi bancarie: c’è aiuto di Stato?, in Mercato concorrenza regole, 2015, 2, 515 ff.; DOMENICUCCI, Il salvataggio di Banca Tercas non è un aiuto di Stato secondo il Tribunale dell’Unione Europea, in Rivista Eurojus, 2019, 3, 174 ff.; MECATTI, L’organizzazione dei sistemi di garanzia dei depositanti in funzione degli interventi alternativi per la prevenzione e la gestione della crisi delle banche, in Banca impresa società, 2020, 2, 217 ff.; ROSSANO, Gli aiuti di Stato alle banche e le ritrattazioni della Commissione: tra distorsioni della concorrenza e (in)stabilità finanziaria, nota a Trib. UE 12 novembre 2015, in RTDE, 2016, 1, pt. 2, 1ff..; ID., Il Tribunale UE boccia la Commissione europea sul caso Tercas, nota a Trib. UE sez. ampliata III 19 marzo 2019, in RTDE, 2019, 2, pt. 2, 23 ff.; ID., La Corte di Giustizia UE sul caso Tercas: oltre il danno la beffa, nota a sentenza della Corte di giustizia del 2 marzo 2021, causa C 425/19 P, in RTDE, 2021, 1, 1 ff.; SCIPIONE, Aiuti di Stato, crisi bancarie e ruolo dei Fondi di garanzia dei depositanti, in Giur. Comm., 2020, 1, 184 ff.

[4] Namely, when questioning the existence of a State aid by a private law entity (such as a consortium), must be taken into account both the risk of under-inclusion of measures, according to an anti-elusive approach, and the risk of over-inclusion, subsuming in the scope of the State aid discipline private benefits (see Paragraph 65 of the Judgement).

[5] The principles are contained in the Communication of the Commission on the application, from August 1^st 2013, of the rules on State aid to support measures for banks in the context of the financial crisis (also called Banking Communication – 2013/C 216/01), which, as other Communications, aims at disclosing the interpretative criteria adopted in its assessments, and, can be considered as a form of self-limitation and regulation (see Judgment of the Court Grand Chamber 19th July 2016 – Case C-526/14 – Kotnik). Thus, the purpose of the aforementioned Banking Communication is to ensure a fair balance between protecting financial stability, and minimizing distortions of competition between banks in the European internal market.

[6] According to the Banking Communication, the legal basis for State aid to the financial sector in Article 107 paragraph 3 letter b), which refers to “aid […] to remedy a serious disturbance in the economy of a Member State”. For the procedural aspects, see Council Regulation EU/2015/1589 of 13 July 2015. However the Commission recently issued a Communication providing a Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak(2020/C 91 I/01), in turn amended and integrated through the Communication from the Commission 2020/C 164/03, and extended on 28^th January 2021. Within the Temporary Framework, the legal basis for the aid may be included in paragraph 2 lett. b): “aid to make good the damage caused by natural disasters or exceptional occurrences”.

[7] May be useful to recall that the interventions can be grouped into two categories: a first, cd. mandatory interventions, aimed at the «direct protection» of depositors, in compulsory liquidation and resolution; a second cd. voluntary interventions, in accordance with the bylaws, carried out in different ways but in any case for the purpose (and within the limits) of reducing the costs of the intervention for its members.

[8] Opinion of advocate general Tanchev, 29 October 2020, Case C-425/19 P.

[9] As already pointed out, with various nuances, by doctrine prior to the DGSD. See, BONFATTI – VATTERMOLI, I sistemi di garanzia dei depositanti, in Il Fallimento e le altre procedure concorsuali, CENDON (edited by), UTET, Torino, 2000, Tomo V.; NIGRO, Il fondo interbancario di tutela dei depositi: prime riflessioni, in Diritto della banca e del mercato finanziario, I, 394 ss.; COSTI, L’ordinamento bancario, Il Mulino, Bologna, 2007, IV ed.

[10] Decision of the European Commission of the 10th November 1999 – 2000/600/EC.  See ARGENTATI, sub art. 96-quater.3, in Commentario al Testo Unico delle leggi in materia bancaria e creditizia, CAPRIGLIONE (edited by), Cedam, Padova, 2018, which highlights the coincidence, albeit with different outcomes in the evaluation, of numerous elements with the Tercas case. See also the cd. Banesto case. It was a Spanish bank, with respect to which the Spanish public DGS intervened in the context of the public bail-out. Although it is not possible to analyze the reasoning, as today only the press release is available (Press release, 15 December 1994 – IP/94/1226), the case is placed before the implementation of the 1994 directive and cannot be taken as a reference.

[11] Since the fascist age also operated the Federal Guarantee Fund (Fondo Federale di Garanzia – Article 18 of the Consolidated Act on the Casse di Risparmio and Monti di Pietà di prima categoria – Royal Decree 25th April, 1929, No. 967 and Article 57 of the implementing regualtion – Royal Decree 5th February, 1931, No. 225, abrogated by Law No. 218 of 1990, which eliminated Casse di Risparmio and Monti di Pietà from the Italian legal system.

[12] See COSTI, L’ordinamento bancario, mentioned.

[13] In the past, the presence of the typical consortium purpose and its characteristics according to the Italian business law has been criticized. See BONFATTI – VATTERMOLI, I sistemi di garanzia dei depositanti, in Il Fallimento e le altre procedure concorsuali, CENDON (edited by), UTET, Torino, 2000, Vol. V.; COSTI, L’ordinamento bancario, mentioned; NIGRO, Il fondo interbancario di tutela dei depositi: prime riflessioni, mentioned.

[14] The DGSD defines «competent authority» the national authorities competent for the supervision in the context of the first pillar of the Banking Union (Article 4, paragraph 1, No. 40 of Regulation EU/575/2013 – CRR).

[15] Firstly, as regards the authorisation power by the Bank of Italy on the measures in favour of Tercas, the Court stated that it is the offspring of its prudential supervisory action. Besides, the Bank of Italy cannot force the FITD into supporting an entity in distress; in turn, the FITD is not obliged to adopt an authorised measure. Therefore, the authorisation, as well as the previous measures (such as the FITD omologation as a DGS) are not enough to demonstrate that the State was empowered to orientate those resources exercising a dominant influence over the consortium. Secondly, regarding the extraordinary commissioner’s role, the fact that he cannot initiate the proceeding that can lead to the adoption of a measure, by sending a non-binding request, does not exclude the FITD’s autonomy in making its own decisions. Furthermore, the extraordinary commissioner is not the only legitimate subject to propose such request, as happened in Tercas case, in which the initiative came from BPB and not from the Bank of Italy. In other words, the extraordinary commissioner acted as a mere director and legal representative of Tercas. Thirdly, according to the judgement, the presence of representatives from the Bank of Italy at FITD’s governing bodies meetings should not be relevant, because they participate as sole observers. Moreover, the Commission did not prove that the Bank of Italy exercised a dominant influence over the negotiations between FITD, BPB and the extraordinary commissioner because: on the first hand, the informal meetings between the interested parties and the Bank of Italy could be considered as an expression of the physiological dialogue with the competent Authorities; on the other hand, the Bank of Italy’s invitation to FITD to reach a «balanced agreement» with BPB about the deficit, taking into account the possible negative consequences, was deemed as a mere invitation without any binding effect. Cfr. Paragraphs 107 – 132. See also MARRA, The Tercas Case, mentioned.

[16] In this regard, judgement of the General Court (Third Section) of 30th June 2021 (case T-635/19) was also recently issued, in which the Court rejected a request by shareholders and creditors of Banca Marche of compensation for non contractual liability addressed to the European Union pursuant to Article 268 (and Article 340) TFEU as the European Commission would have prevented the rescue of the bank by the FITD. The Court stated that the applicants failed to adequately demonstrate the «causal link» between the Commission’s behaviour and the damage suffered as a result of the resolution of the bank. On this judgement, see DE POLI, Caso Tercas: la commedia degli equivoci e degli inganni ed il tempo dell’illusione (svanita), available at www.dirittobancario,it, 14 July 2021. Discusses the possibility for investors to file against the Commission to obtain a compensation for the damage suffered due to the Institution’s behaviour in the State aid assessment, also ROSSANO, La Corte di Giustizia UE sul caso Tercas: oltre il danno la beffa, mentioned.

[17] On the voluntary interventions before 2014, see ANTONUCCI, Raccolta del risparmio e crisi d’impresa: la tutela assicurativa, in I nuovi contratti nella prassi civile e commerciale, Vol. XXI, Assicurazioni, Vol. II, UTET, Torino, 2004; BONFATTI – VATTERMOLI, I sistemi di garanzia dei depositanti, mentioned.

[18] Based on what the Court affirmed in the Stardust Marine case (Judgement of the Court of 16th May 2002 – case C-482/99) on the possibility of considering State aid also intervention formally coming from the private sector.

[19] The latter inserted with the aforementioned Legislative Decree No. 30 of 2016.

[20] Which constitutes autonomous assets (Article 96.1. paragraph 5 of the Italian Consolidated Banking Act).

[21] The following measures are distinguished: a) pay-out interventions (paragraph 1); b) financing measures for resolution pursuant to Article 109 BRRD (paragraph 2); c) preventive interventions (paragraph 3); d) alternative interventions in the context of national insolvency proceedings (paragraph 6).

[22] It is a consequence of the events relating to the Tercas case, as stated by the FITD itself. See, Schema volontario di intervento. Relazione e Rendiconto, Annual Report 2016.

[23] On the relevance of the constraint imposed by the law on the assets administered by the entities, also as a component of the safety net functional to the financial stability, see BONFATTI – VATTERMOLI, I sistemi di garanzia dei depositanti, mentioned. The Authors recall on this topic, BOCCUZZI, Il sistema di garanzia dei depositi, in La nuova legge bancaria, FERRO LUZZI – CASTALDI (edited by), 1996.

[24] This quantitative limit is now legally required also for alternative interventions (financed with the «financial means») due to the regulatory implementation of the least cost criterion provided by Article 96-bis of the Italian Consolidated Banking Act and Article 11 paragraph 3 and 6 of the DGSD. In the judgement is also clear that the General Court instead uses this argument as an indicator of the autonomy of the FITD, provided exclusively by its bylaws (paragraph 104).

[25] Paragraphs 94 – 106.

[26] The DGSD and the Italian Consolidated Banking Act use different terms for the principle of least cost respectively for alternative (during national liquidation procedures) and preventive interventions (aimed at preventing the failure of the bank). In the first case, we refer to the reimbursement of depositors, in the second we refer to intervention to «the fulfilling the statutory or contractual mandates of the respective DGS». However, this is specified in recital 16 of the DGSD which also adds «with regard to protecting covered deposits at the credit institution or the institution itself».

[27] According to the said provision a designated authority is to be considered the body which administers the DGS or in case it is administred by a private entity, the public authority competent for the supervision.

[28] See CERCONE, sub art. 96.2, in Commentario al Testo Unico delle leggi in materia bancaria e creditizia, CAPRIGLIONE (edited by), Cedam, Padova, 2018.

[29] Or, more generally, to those listed by the FGDCC’s bylaws (Article 1).

[30] «For the purposes of general utility, the law may originally reserve or transfer, by expropriation and subject to compensation, to the State, to public bodies or to communities of worker or users, certain companies or categories of companies, which refer to essential public services or sources of energy, or to monopoly situations and have a pre-eminent general interest character».

[31] See, MACCHIA. Integrazione amministrativa e unione bancaria, Giappichelli, Torino, 2018; DI PIETROPAOLO, sub Meccanismo di risoluzione unico, in Enc. Dir., Annali, IX, 2016.

[32] See ANTONUCCI, Raccolta del risparmio e crisi d’impresa, mentioned.

[33] The judgement of the Italian Constitutional Court No. 36 of 7th February 2000, which declared the issue of the constitutional legitimacy unfounded with respect to Article 38 of the Italian Constitution, of Article 76 paragraph 1 of the Royal Decree No. 1827 of 4th October 1935; the judgement of the Italian Constitutional Court No. 160 of 1974 which declared inadmissible the request for a popular referendum for the abrogation of the provisions on the management under a substantial monopoly regime by INAIL of the compulsory insurance against accidents at work and occupational diseases, allowing access to the market to private insurance companies under competition; as well as the judgement of the CJEU (fifth section) of 22 January 2001 (case C-218/00) concerning the possibility, denied by the Court, of considering INAIL, a non-profit insurance body under Italian law, as a company pursuant to Article 81 and ff. of the Treaty (for the purposes of competition law).

[34] The judgement of the Italian Constitutional Court No. 160 of the 1974 defines social insurance through the following indices: contributions are paid by a person other than the insured; the payment of contributions does not affect the right to the benefit; the person required to pay the contributions has no rights towards the entity; the discipline is dominated by a public function. Similarly, the judgement of the Italian Constitutional Court No. 36 of 2000, referring to the aforementioned judgement, uses the following criteria: a business profit is not pursued but only a public purpose; the payment of the benefits is independent of the related contributions; the economic burden is divided; the insurance is also expressed through forms of assistance and social service. On the European level, the CJEU of 22 January 2002 (C-218/00) provided for: the presence of a social purpose; the services are independent of any liability of the employer or employee; the benefit is also due in case of unpaid contributions; the non-exlusive proportionality of risk contributions and income benefits implement the principle of solidarity; public intervention is foreseen in the definition of contributions; compulsory registration in the insurance system is envisaged.

[35] Although it is a prevailing view that membership is a condition for the exercise of the banking activity and not for its authorisazion. See, CERCONE, sub art. 96 bis, in Commentario al Testo Unico delle leggi in materia bancaria e creditizia, CAPRIGLIONE (edited by), Cedam, Padova, 2018; BENTIVEGNA, Fondi di garanzia dei depositi e crisi bancarie. Novità e profili problematici alla luce del nuovo framework regolamentare europeo in materia risanamento e risoluzione, in Riv. Trim. Dir. Econ., 2015, 3, 25 ss. There are also contrary opinions. See SEPE, La costituzione di banche tra disciplina speciale e nuovo diritto societario, Bari, 2004, recalled by CERCONE, sub art. 96 bis, mentioned.

[36] Contributions are proportionate to the amount of protected deposits, and to the risk profile determined according to methodologies estabilished by the DGS and approved by the Bank of Italy; the deposits indicated in Article 96-bis.1 paragraph 4; are also taken into account the different phases of the economic cycle; the possible pro-cyclical impact and the possible participation by the banks adhering to an institutional protection system. The criteria are also specified by EUROPEAN BANKING AUTHORITY, Guidelines on methods for calculating contributions to deposit guarantee schemes, of 22 September 2015 (EBA/GL/2015/10).

[37] ARGENTATI, sub art. 96-quater.3, in Commentario al Testo Unico delle leggi in materia bancaria e creditizia, CAPRIGLIONE (edited by), Cedam, Padova, 2018.

Authors

Giorgia Marra is a PhD in Law and Business at Luiss Guido Carli University in Rome.

Sarah-Louisa Bölter is legal officer at the Austrian Ministry of Interior.