Court of Justice of the European Communities (including Court of First Instance Decisions)

JUDGMENT OF THE COURT (First Chamber)

7 September 2023 (*)

(Appeal – Prudential supervision of credit institutions – Specific supervisory tasks assigned to the European Central Bank (ECB) – Decision to withdraw the authorisation of the credit institution Versobank AS – Division of powers between the ECB and the national competent authorities – Procedural rights – Procedural defects)

In Case C‑803/21 P,

APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, lodged on 17 December 2021,

Versobank AS, established in Tallinn (Estonia), represented by O. Behrends, Rechtsanwalt,

appellant,

the other parties to the proceedings being:

Ukrselhosprom PCF LLC, established in Solone (Ukraine),

applicant at first instance,

European Central Bank (ECB), represented by E. Koupepidou, S. Letocart and G. Marafioti, acting as Agents,

defendant at first instance,

European Commission, represented by A. Nijenhuis, A. Steiblytė and D. Triantafyllou, acting as Agents,

intervener at first instance,

THE COURT (First Chamber),

composed of A. Arabadjiev, President of the Chamber, L. Bay Larsen (Rapporteur), Vice-President of the Court, acting as Judge of the First Chamber, P.G. Xuereb, T. von Danwitz and A. Kumin, Judges,

Advocate General: J. Kokott,

Registrar: A. Calot Escobar,

having regard to the written procedure,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1        By its appeal, Versobank AS asks the Court of Justice to set aside the judgment of the General Court of the European Union of 6 October 2021, Ukrselhosprom PCF and Versobank v ECB (T‑351/18 and T‑584/18, EU:T:2021:669; ‘the judgment under appeal’), by which the General Court, (i) found that there was no longer any need to adjudicate on the action in Case T‑351/18 for annulment of Decision ECB‑SSM‑2018‑EE‑1 WHD‑2017‑0012 of the European Central Bank (ECB) of 26 March 2018 (‘the decision of 26 March 2018’ or ‘the first decision’), and, (ii) in Case T‑584/18, dismissed the action for annulment both of Decision ECB‑SSM‑2018‑EE‑2‑WHD‑2017‑0012 of the ECB of 17 July 2018 (‘the decision of 17 July 2018’ or ‘the second decision’), replacing the first decision, by which the ECB withdrew Versobank’s authorisation to operate as a credit institution, and of Decision ECB‑SSM‑2018‑EE‑3 of the ECB of 14 August 2018 on the costs relating to the review procedure.

 Legal context

 Directive 2013/36/EU

2        Article 3 of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ 2013 L 176, p. 338), entitled ‘Definitions’, provides in paragraph 1 thereof:

‘For the purposes of this Directive, the following definitions shall apply:

…

(36)      “competent authority” means competent authority as defined in point (40) of Article 4(1) of Regulation (EU) No 575/2013 [of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ 2013 L 176, p. 1)];

…’

3        Article 18 of that directive provides:

‘The competent authorities may only withdraw the authorisation granted to a credit institution where such a credit institution:

(a)      does not make use of the authorisation within 12 months, expressly renounces the authorisation or has ceased to engage in business for more than six months, unless the Member State concerned has made provision for the authorisation to lapse in such cases;

…

(e)      falls within one of the other cases where national law provides for withdrawal of authorisation; or

(f)      commits one of the breaches referred to in Article 67(1).’

4        Article 35 of that directive, entitled ‘Notification requirement and interaction between competent authorities’, provides in paragraphs 1 to 3:

‘1.      A credit institution wishing to establish a branch within the territory of another Member State shall notify the competent authorities of its home Member State.

2.      Member States shall require every credit institution wishing to establish a branch in another Member State to provide all the following information when effecting the notification referred to in paragraph 1:

(a)      the Member State within the territory of which it plans to establish a branch;

(b)      a programme of operations setting out, inter alia, the types of business envisaged and the structural organisation of the branch;

(c)      the address in the host Member State from which documents may be obtained;

(d)      the names of those to be responsible for the management of the branch.

3.      Unless the competent authorities of the home Member State have reason to doubt the adequacy of the administrative structure or the financial situation of the credit institution, taking into account the activities envisaged, they shall, within three months of receipt of the information referred to in paragraph 2, communicate that information to the competent authorities of the host Member State and shall inform the credit institution accordingly.

…’

5        Article 36 of the directive, entitled ‘Commencement of activities’, states in paragraphs 1 and 2:

‘1.      Before the branch of a credit institution commences its activities the competent authorities of the host Member State shall, within two months of receiving the information referred to in Article 35, prepare for the supervision of the credit institution in accordance with Chapter 4 and if necessary indicate the conditions under which, in the interests of the general good, those activities shall be carried out in the host Member State.

2.      On receipt of a communication from the competent authorities of the host Member State, or in the event of the expiry of the period provided for in paragraph 1 without receipt of any communication from the latter, the branch may be established and may commence its activities.’

6        Article 67 of Directive 2013/36, entitled ‘Other provisions’, provides in paragraph 1:

‘This Article shall apply at least in any of the following circumstances:

…

(d)      an institution fails to have in place governance arrangements required by the competent authorities in accordance with the national provisions transposing Article 74;

(e)      an institution fails to report information or provides incomplete or inaccurate information on compliance with the obligation to meet own funds requirements set out in Article 92 of Regulation [No 575/2013] to the competent authorities in breach of Article 99(1) of that Regulation;

…

(o)      an institution is found liable for a serious breach of the national provisions adopted pursuant to Directive 2005/60/EC [of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (OJ 2005 L 309, p. 15)];

…’

7        Article 74 of Directive 2013/36, entitled ‘Internal governance and recovery and resolution plans’, provides in paragraph 1 that ‘institutions shall have robust governance arrangements, which include a clear organisational structure with well-defined, transparent and consistent lines of responsibility, effective processes to identify, manage, monitor and report the risks they are or might be exposed to, adequate internal control mechanisms, including sound administration and accounting procedures, and remuneration policies and practices that are consistent with and promote sound and effective risk management’.

 Regulation No 575/2013

8        Article 4 of Regulation No 575/2013, entitled ‘Definitions’, provides in paragraph 1:

‘For the purposes of this Regulation, the following definitions shall apply:

…

(40)      “competent authority” means a public authority or body officially recognised by national law, which is empowered by national law to supervise institutions as part of the supervisory system in operation in the Member State concerned;

…’

 Regulation (EU) No 1024/2013

9        Recital 28 of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ 2013 L 287, p. 63; ‘the Basic SSM Regulation’) is worded as follows:

‘Supervisory tasks not conferred on the ECB should remain with the national authorities. Those tasks should include the power to receive notifications from credit institutions in relation to the right of establishment and the free provision of services, to supervise bodies which are not covered by the definition of credit institutions under Union law but which are supervised as credit institutions under national law, to supervise credit institutions from third countries establishing a branch or providing cross-border services in the Union, to supervise payments services, to carry out day-to-day verifications of credit institutions, to carry out the function of competent authorities over credit institutions in relation to markets in financial instruments, the prevention of the use of the financial system for the purpose of money laundering and terrorist financing and consumer protection.’

10      Article 2 of that regulation, entitled ‘Definitions’, provides:

‘For the purposes of this Regulation, the following definitions shall apply:

…

2.      “national competent authority” means a national competent authority designated by a participating Member State in accordance with Regulation [No 575/2013] and Directive [2013/36];

…

9.      “Single supervisory mechanism” (SSM) means the system of financial supervision composed by the ECB and national competent authorities of participating Member States as described in Article 6 of this Regulation.’

11      Article 4 of that regulation, entitled ‘Tasks conferred on the ECB’, provides:

‘1.      Within the framework of Article 6, the ECB shall, in accordance with paragraph 3 of this Article, be exclusively competent to carry out, for prudential supervisory purposes, the following tasks in relation to all credit institutions established in the participating Member States:

(a)      to authorise credit institutions and to withdraw authorisations of credit institutions subject to Article 14;

…

3.      For the purpose of carrying out the tasks conferred on it by this Regulation, and with the objective of ensuring high standards of supervision, the ECB shall apply all relevant Union law, and where this Union law is composed of Directives, the national legislation transposing those Directives. Where the relevant Union law is composed of Regulations and where currently those Regulations explicitly grant options for Member States, the ECB shall apply also the national legislation exercising those options.

…’

12      Article 6 of the Basic SSM Regulation, entitled ‘Cooperation within the SSM’ states:

‘1.      The ECB shall carry out its tasks within a single supervisory mechanism composed of the ECB and national competent authorities. The ECB shall be responsible for the effective and consistent functioning of the SSM.

2.      Both the ECB and national competent authorities shall be subject to a duty of cooperation in good faith, and an obligation to exchange information.

…

4.      In relation to the tasks defined in Article 4 except for points (a) and (c) of paragraph 1 thereof, the ECB shall have the responsibilities set out in paragraph 5 of this Article and the national competent authorities shall have the responsibilities set out in paragraph 6 of this Article, within the framework and subject to the procedures referred to in paragraph 7 of this Article, for the supervision of the following credit institutions, financial holding companies or mixed financial holding companies, or branches, which are established in participating Member States, of credit institutions established in non-participating Member States:

–        those that are less significant …

…

5.      With regard to the credit institutions referred to in paragraph 4, and within the framework defined in paragraph 7:

…

(b)      when necessary to ensure consistent application of high supervisory standards, the ECB may at any time, on its own initiative after consulting with national competent authorities or upon request by a national competent authority, decide to exercise directly itself all the relevant powers for one or more credit institutions referred to in paragraph 4, including in the case where financial assistance has been requested or received indirectly from the EFSF [European Financial Stability Facility] or the ESM [European Stability Mechanism];

…

6.      Without prejudice to paragraph 5 of this Article, national competent authorities shall carry out and be responsible for the tasks referred to in points (b), (d) to (g) and (i) of Article 4(1) and adopting all relevant supervisory decisions with regard to the credit institutions referred to in the first subparagraph of paragraph 4 of this Article, within the framework and subject to the procedures referred to in paragraph 7 of this Article.

…

7.      The ECB shall, in consultation with national competent authorities, and on the basis of a proposal from the Supervisory Board, adopt and make public a framework to organise the practical arrangements for the implementation of this Article. …

…’

13      Article 14 of that regulation, entitled ‘Authorisation’, provides in paragraphs 5 and 6:

‘5.      Subject to paragraph 6, the ECB may withdraw the authorisation in the cases set out in relevant Union law on its own initiative, following consultations with the national competent authority of the participating Member State where the credit institution is established, or on a proposal from such national competent authority. These consultations shall in particular ensure that before taking decisions regarding withdrawal, the ECB allows sufficient time for the national authorities to decide on the necessary remedial actions, including possible resolution measures, and takes these into account.

Where the national competent authority which has proposed the authorisation in accordance with paragraph 1 considers that the authorisation must be withdrawn in accordance with the relevant national law, it shall submit a proposal to the ECB to that end. In that case, the ECB shall take a decision on the proposed withdrawal taking full account of the justification for withdrawal put forward by the national competent authority.

6.      As long as national authorities remain competent to resolve credit institutions, in cases where they consider that the withdrawal of the authorisation would prejudice the adequate implementation of or actions necessary for resolution or to maintain financial stability, they shall duly notify their objection to the ECB explaining in detail the prejudice that a withdrawal would cause. In those cases, the ECB shall abstain from proceeding to the withdrawal for a period mutually agreed with the national authorities. The ECB may extend that period if it is of the opinion that sufficient progress has been made. If, however, the ECB determines in a reasoned decision that proper actions necessary to maintain financial stability have not been implemented by the national authorities, the withdrawal of the authorisations shall apply immediately.’

14      Article 24 of that regulation, entitled ‘Administrative Board of Review’, provides in paragraphs 1, 7, 8 and 11:

‘1.      The ECB shall establish an Administrative Board of Review for the purposes of carrying out an internal administrative review of the decisions taken by the ECB in the exercise of the powers conferred on it by this Regulation after a request for review submitted in accordance with paragraph 5. The scope of the internal administrative review shall pertain to the procedural and substantive conformity with this Regulation of such decisions.

…

7.      After ruling on the admissibility of the review, the Administrative Board of Review shall express an opinion within a period appropriate to the urgency of the matter and no later than two months from the receipt of the request and remit the case for preparation of a new draft decision to the Supervisory Board. The Supervisory Board shall take into account the opinion of the Administrative Board of Review and shall promptly submit a new draft decision to the Governing Council. The new draft decision shall abrogate the initial decision, replace it with a decision of identical content, or replace it with an amended decision. The new draft decision shall be deemed adopted unless the Governing Council objects within a maximum period of ten working days.

8.      A request for review pursuant to paragraph 5 shall not have suspensory effect. However, the Governing Council, on a proposal by the Administrative Board of Review may, if it considers that circumstances so require, suspend the application of the contested decision.

…

11.      This Article is without prejudice to the right to bring proceedings before the [Court of Justice of the European Union] in accordance with the Treaties.’

 Regulation (EU) No 468/2014

15      Article 80 of Regulation (EU) No 468/2014 of the European Central Bank of 16 April 2014 establishing the framework for cooperation within the Single Supervisory Mechanism between the European Central Bank and national competent authorities and with national designated authorities (SSM Framework Regulation) (OJ 2014 L 141, p. 1), entitled ‘NCAs’ [national competent authorities] proposal to withdraw an authorisation’, provides:

‘1.      If the relevant NCA considers that a credit institution’s authorisation should be withdrawn in whole or in part in accordance with relevant Union or national law, including a withdrawal at the credit institution’s request, it shall submit to the ECB a draft decision proposing the withdrawal of the authorisation (hereinafter a “draft withdrawal decision”), together with any relevant supporting documents.

2.      The NCA shall coordinate with the national authority competent for the resolution of credit institutions (hereinafter the “national resolution authority”) with regard to any draft withdrawal decision that is relevant to the national resolution authority.’

16      Article 83 of that regulation, entitled ‘ECB decision on the withdrawal of an authorisation’, states:

‘1.      The ECB shall take a decision on the withdrawal of an authorisation without undue delay. In doing so it may accept or reject the relevant draft withdrawal decision.

2.      In taking its decision, the ECB shall take into account all of the following: (a) its assessment of the circumstances justifying withdrawal; (b) where applicable, the NCA’s draft withdrawal decision; (c) consultation with the relevant NCA and, where the NCA is not the national resolution authority, the national resolution authority (together with the NCA, the “national authorities”); (d) any comments provided by the credit institution pursuant to Articles 81(2) and 82(3).

3.      The ECB shall also take a decision in the cases described in Article 84 if the relevant national resolution authority does not object to the withdrawal of the authorisation, or the ECB determines that proper actions necessary to maintain financial stability have not been implemented by the national authorities.’

 Regulation (EU) No 806/2014

17      Article 7 of Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ 2014 L 255, p. 1; ‘the SRM Regulation’), entitled ‘Division of tasks within the SRM’, states in paragraph 3:

‘In relation to entities and groups other than those referred to in paragraph 2, without prejudice to the responsibilities of the [Single Resolution Board (SRB)] [“the Board”] for the tasks conferred on it by this Regulation, the national resolution authorities shall perform, and be responsible for, the following tasks:

(a)      adopting resolution plans and carrying out an assessment of resolvability in accordance with Articles 8 and 10 and with the procedure laid down in Article 9;

(b)      adopting measures during early intervention in accordance with Article 13(3);

(c)      applying simplified obligations or waiving the obligation to draft a resolution plan, in accordance with Article 11;

(d)      setting the level of minimum requirement for own funds and eligible liabilities, in accordance with Article 12;

(e)      adopting resolution decisions and applying resolution tools referred to in this Regulation, in accordance with the relevant procedures and safeguards, provided that the resolution action does not require any use of the Fund and is financed exclusively by the tools referred to in Articles 21 and 24 to 27 and/or by the deposit guarantee scheme, in accordance with Article 79, and with the procedure laid down in Article 31;

(f)      writing down or converting relevant capital instruments pursuant to Article 21, in accordance with the procedure laid down in Article 31.

If the resolution action requires the use of the Fund, the Board shall adopt the resolution scheme.

When adopting a resolution decision, the national resolution authorities shall take into account and follow the resolution plan as referred to in Article 9, unless they assess, taking into account the circumstances of the case, that the resolution objectives will be achieved more effectively by taking actions which are not provided for in the resolution plan.

When performing the tasks referred to in this paragraph, the national resolution authorities shall apply the relevant provisions of this Regulation. Any references to the Board in Article 5(2), Article 6(5), Article 8(6), (8), (12) and (13), Article 10(1) to (10), Articles 11 to 14, Article 15(1), (2) and (3), Article 16, the first subparagraph of Article 18(1), Article 18(2) and (6), Article 20, Article 21(1) to (7), the second subparagraph of Article 21(8), Article 21(9) and (10), Article 22(1), (3) and (6), Articles 23 and 24, Article 25(3), Article 27(1) to (15), the second sentence of the second subparagraph, the third subparagraph, and the first, third and fourth sentences of the fourth subparagraph of Article 27(16), and Article 32 shall be read as references to the national resolution authorities with regard to groups and entities referred to in the first subparagraph of this paragraph. For that purpose the national resolution authorities shall exercise the powers conferred on them under national law transposing Directive 2014/59/EU [of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and [2013/36], and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ 2014 L 173, p. 190)] in accordance with the conditions laid down in national law.

The national resolution authorities shall inform the Board of the measures referred to in this paragraph that are to be taken and shall closely coordinate with the Board when taking those measures.

The national resolution authorities shall submit to the Board the resolution plans referred to in Article 9, as well as any updates, accompanied by a reasoned assessment of the resolvability of the entity or group concerned in accordance with Article 10.’

18      Article 18 of the SRM Regulation, entitled ‘Resolution procedure’, provides in paragraph 1:

‘The Board shall adopt a resolution scheme pursuant to paragraph 6 in relation to entities and groups referred to in Article 7(2), and to the entities and groups referred to in Article 7(4)(b) and (5) where the conditions for the application of those paragraphs are met, only when it assesses, in its executive session, on receiving a communication pursuant to the fourth subparagraph, or on its own initiative, that the following conditions are met:

(a)      the entity is failing or is likely to fail;

(b)      having regard to timing and other relevant circumstances, there is no reasonable prospect that any alternative private sector measures, including measures by an IPS [institutional protection scheme], or supervisory action, including early intervention measures or the write-down or conversion of relevant capital instruments in accordance with Article 21, taken in respect of the entity, would prevent its failure within a reasonable time frame;

(c)      a resolution action is necessary in the public interest pursuant to paragraph 5.

An assessment of the condition referred to in point (a) of the first subparagraph shall be made by the ECB, after consulting the Board. The Board, in its executive session, may make such an assessment only after informing the ECB of its intention and only if the ECB, within three calendar days of receipt of that information, does not make such an assessment. The ECB shall, without delay, provide the Board with any relevant information that the Board requests in order to inform its assessment.

Where the ECB assesses that the condition referred to in point (a) of the first subparagraph is met in relation to an entity or group referred to in the first subparagraph, it shall communicate that assessment without delay to the Commission and to the Board.

An assessment of the condition referred to in point (b) of the first subparagraph shall be made by the Board, in its executive session, or, where applicable, by the national resolution authorities, in close cooperation with the ECB. The ECB may also inform the Board or the national resolution authorities concerned that it considers the condition laid down in that point to be met.’

 Background to the dispute

19      The appellant is a credit institution established in Estonia. Its main shareholder is Ukrselhosprom PCF LLC, which has an equity holding of 85.2622% in it.

20      The appellant was classified as a less significant institution for the purposes of Article 6 of the Basic SSM Regulation.

21      As a less significant credit institution, the appellant was placed under the prudential supervision of the Finantsinspektsioon (Financial Supervisory Authority, Estonia) (‘the FSA’), acting as the national competent authority, within the meaning of Article 2(2) of the Basic SSM Regulation. Moreover, that authority also had competence in relation to the monitoring of compliance with rules intended to combat money laundering and the financing of terrorism (‘AML/CFT’).

22      The FSA, after several on-site inspections, identified recurring breaches committed from 2015 by the appellant in connection with, first, the ineffectiveness of its AML/CFT regime as regards the management of the risks stemming from its business model and, secondly, the inadequacy of the AML/CFT governance arrangements which it had in place. After sending the appellant a number of notices to comply with the legal requirements, the FSA, on 8 August 2016, adopted a precept requiring it to take certain steps to remedy immediately the shortcomings previously identified, in particular by the proper application of existing AML/CFT policies and procedures.

23      By letter of 28 February 2017, the FSA informed the appellant that it had still not complied with all of the obligations imposed by the precept at issue. On 10 April 2017, the FSA adopted, in relation to the appellant, a failing or likely to fail declaration and, on 7 February 2018, the FSA, acting as the national resolution authority, held that a resolution was not in the public interest (together, ‘the FOLTF decisions’).

24      In the course of an inspection carried out in September 2017, the FSA identified material and severe breaches of the AML/CFT legislation similar to those which had been identified in previous inspections, and found that the appellant’s internal control system was weak and inadequate.

25      On 8 February 2018, the ECB received a proposal from the FSA to withdraw the appellant’s authorisation, in accordance with Article 80 of the SSM Framework Regulation. The day before, the FSA, in its capacity as the national resolution authority responsible for credit institutions, had approved the assessment of its resolution department.

26      On 6 March 2018, the ECB’s Supervisory Board approved the draft decision withdrawing the appellant’s authorisation and set a period for it to submit its observations in that regard. After examining the observations submitted by the appellant on 14 March 2018, the ECB – on the basis of Article 4(1)(a) and Article 14(5) of the Basic SSM Regulation, Article 83 of the SSM Framework Regulation, and Article 17 of the Krediidiasutuste seadus (Law on Credit Institutions) of 9 February 1999 (RT I 1999, 23, 349; ‘the Estonian Law on Credit Institutions’), which transposed Directive 2013/36 – adopted and notified to the appellant its decision of 26 March 2018 by which it withdrew the latter’s authorisation.

27      On 27 March 2018, the competent Estonian court adopted a decision opening the proceedings for the liquidation of the appellant.

28      On 26 April 2018, the Administrative Board of Review of the ECB (‘the ABoR’) received an application from Ukrselhosprom PCF for review of the decision of 26 March 2018. The ABoR held that request for review to be admissible, taking the view that that company was directly and individually concerned by that decision.

29      After the ABoR adopted and communicated to the ECB’s Supervisory Board an opinion by which it proposed that the Supervisory Board take the view that the substantive and procedural infringements relied on by Ukrselhosprom PCF were unfounded and that it adopt a decision identical in content to the decision of 26 March 2018, the ECB’s Governing Council followed that opinion and adopted the decision of 17 July 2018, which was notified to the appellant’s liquidators. The latter decision repealed and replaced the decision of 26 March 2018.

30      In paragraph 3.2 of the decision of 17 July 2018, the ECB expressed the view that, on the basis of the evidence gathered and the findings of the on-site inspections carried out by the FSA, the grounds for withdrawal of authorisation set out in Article 18(f) of Directive 2013/36, as transposed into Estonian law, had to be regarded as being satisfied in relation to the appellant. The grounds for that withdrawal of authorisation were as follows:

–        the appellant’s failure to have in place the governance arrangements required by the FSA, in accordance with the national provisions transposing Article 74 of Directive 2013/36;

–        the appellant’s lack of an effective AML/CFT regime to manage the risks stemming from its business model, in spite of three on-site AML/CFT inspections, several meetings and notices, the precept of 8 August 2016 and a letter concerning non-compliance with the precept;

–        the appellant’s failure to implement the precept within the period and to the extent prescribed;

–        the appellant’s submission of misleading and incorrect documents and information to the FSA and its breach of conditions laid down by the legislation of a Member State of the European Economic Area (EEA), namely, the Republic of Latvia.

31      As regards, more specifically, the fourth ground justifying the withdrawal of authorisation, the ECB noted, in paragraph 3.3(d) of the decision of 17 July 2018, that the appellant had submitted misleading and inaccurate information and documents to the FSA concerning its activities in Latvia, stating, first, that it did not own a subsidiary there and, secondly, in its communication of 9 February 2016 to that national competent authority, that it had closed its establishment in Latvia, even though the latter was still operational. The ECB observed that, according to the information communicated by the Latvian national supervisory authority to the FSA, the appellant had created its ‘subsidiary’ in Latvia in breach of the Latvian legislative provisions on the ‘passporting’ procedure laid down in Articles 35 to 38 of Directive 2013/36, while that ‘subsidiary’ had provided financial services in Latvia without interruption since October 2013. In the ECB’s view, such conduct, which constituted an infringement of the Estonian Law on Credit Institutions, was an additional ground for withdrawal of authorisation under Article 18(e) of Directive 2013/36.

32      As regards the proportionality and necessity of the withdrawal of authorisation, the ECB also considered that, in the circumstances of the case, the withdrawal of authorisation had to be regarded as an appropriate and proportionate measure, and that there were no less onerous measures capable of restoring legality. In particular, it set out and analysed the various available measures, explaining why it considered that they were not effective in terms of restoring legality.

33      Specifically, with regard to self-liquidation, the ECB acknowledged that such a solution had been proposed by the appellant in its observations on the draft decision of 26 March 2018, that such a possibility existed under Estonian law and that it would in any event have resulted in the withdrawal of authorisation. Nevertheless, the ECB decided not to opt for that possibility, since (i) self-liquidation would have obfuscated the substantive reasons for which the FSA had proposed the withdrawal of authorisation; (ii) such a withdrawal of authorisation would have been based on Article 16(3) of the Estonian Law on Credit Institutions and not on Article 17 of that law; (iii) self-liquidation would thus have given an inaccurate view of the severity of the appellant’s breaches of the applicable law, which, in the ECB’s view, justified a non-voluntary withdrawal of the authorisation; and (iv) under Article 20(5) of Directive 2013/36, the communication regarding the withdrawal of authorisation must concern not only the withdrawal itself but also the grounds on which it is based. As regards acquisition by another Estonian company, the ECB did not accept that solution either because (i) no documentary evidence had been provided in relation to there being a specific commitment on the part of any of the investors and (ii) the appellant’s business plan did not provide sufficient information to determine whether the transaction would have led to a change in commercial strategy. Furthermore, despite the additional period allowed to the appellant to submit the documentation, it had failed to provide the necessary information.

34      Lastly, the ECB considered that, in view of the severity and duration of the breaches, the fact that the appellant had repeated its unlawful conduct despite the various warnings received, and the damage to public confidence in the Estonian and European financial system, caused by its conduct, the public interest in restoring legality outweighed the appellant’s private interest in maintaining its authorisation.

 The actions before the General Court and the judgment under appeal

35      By applications lodged at the Registry of the General Court on 5 June 2018 and 27 September 2018, the appellant and Ukrselhosprom PCF brought actions for annulment, respectively, of the decision of 26 March 2018 (Case T‑351/18) and the decision of 17 July 2018 (Case T‑584/18).

36      After joining, in the judgment under appeal, Cases T‑351/18 and T‑584/18 for the purposes of the judgment, the General Court found, with regard to Case T‑351/18, that the action had become devoid of purpose after it had been brought and that there was therefore no longer any need to rule on it.

37      With respect to Case T‑584/18, the General Court declared the action for annulment of the decision of 17 July 2018 admissible as regards Versobank, but dismissed that action on the merits. In particular, it rejected the pleas alleging that the ECB had no power to adopt a decision concerning the withdrawal of authorisation and liquidation, to assess AML/CFT issues, to refuse to permit self-liquidation and to refuse to permit the appellant to be sold to other potential investors; the pleas alleging breach of the principles of proportionality, equal treatment and non-discrimination, the protection of legitimate expectations and legal certainty; and the pleas alleging breach of essential procedural requirements, the right to be heard, the rights of the defence and the duty to give reasons.

 Forms of order sought by the parties before the Court of Justice

38      By its appeal, the appellant claims that the Court of Justice should:

–        set aside the judgment under appeal;

–        annul the decisions of 26 March 2018 and 17 July 2018; and

–        order the ECB to pay the costs.

39      The ECB, supported by the Commission, contends that the Court should dismiss the appeal and order the appellant to pay the costs.

 The appeal

40      By its appeal, the appellant puts forward six grounds for setting aside the judgment of the General Court. It complains that the General Court erred in law, first, by finding that there was no need to adjudicate on the action for annulment of the decision of 26 March 2018; second, by rejecting the pleas related to infringements of essential procedural requirements; third, in finding that the ECB had competence to withdraw the appellant’s authorisation on account of alleged breaches of AML/CFT provisions; fourth, by failing to recognise that the infringement of Latvian law resulting from the operation of a branch in Latvia could not serve as a basis for the withdrawal of authorisation since it had been the subject of a settlement with the competent authority, the Finanšu un kapitāla tirgus komisija (Financial and Capital Markets Commission, Latvia) (‘the FKTK’), before the competent court and with the latter’s approval; fifth, by considering, inter alia, that the resolution matters in the present case were governed by the SRM Regulation; and, sixth, by disregarding certain procedural rules.

 The second ground of appeal

41      The second ground of appeal, by which the appellant criticises the General Court for failing to find any infringement of essential procedural requirements, is divided into 10 parts. In view of its subject matter, the second part thereof will be examined together with the first ground of appeal.

 First part of the second ground of appeal

 Arguments of the parties

42      By the first part of the second ground of appeal, the appellant submits that, contrary to the General Court’s finding in the judgment under appeal, the fact that the ECB failed to notify the second decision to it constituted an infringement of essential procedural requirements. The appellant states that it was only because of favourable circumstances that the former members of its board of directors became aware of the existence of the second decision and were able, at extremely short notice, to lodge an action for annulment. Lastly, the fact that its main shareholder was notified of that decision could not replace the obligation imposed on the ECB to notify the appellant of the second decision.

43      The ECB, supported by the Commission, disputes the appellant’s arguments.

 Findings of the Court

44      In that regard, even assuming that notification of an act is an essential procedural requirement, it should be observed that, in the present case, the fact that the second decision was not notified to the appellant did not deprive it of the opportunity to acquaint itself, in good time, with that decision and to assess its validity, such that the appellant was likewise not deprived of the opportunity, which it moreover used, to bring an action against that decision before the General Court (see, by analogy, judgment of 16 November 2011, Bank Melli Iran v Council, C‑548/09 P, EU:C:2011:735, paragraph 55).

45      It follows that the first part of the second ground of appeal is unfounded.

 Tenth part of the second ground of appeal

 Arguments of the parties

46      By the tenth part of the second ground of appeal, the appellant complains that the General Court erred in holding, in paragraph 407 of the judgment under appeal, that, even in the absence of procedural irregularities, the outcome of the second decision would have been the same. While such a finding would have been valid only if it had been based on clear factual evidence, the judgment under appeal contains no concrete explanation in that regard.

47      The ECB, supported by the Commission, argues that this part of the plea must be rejected as unfounded.

 Findings of the Court

48      It should be observed that, even if it were to be assumed that procedural irregularities vitiated the procedure for reviewing the first decision, such irregularities could entail the annulment of the second decision only if it was shown that in the absence of those irregularities, that latter decision might have been substantively different (see, to that effect, judgment of 11 November 2021, Autostrada Wielkopolska v Commission and Poland, C‑933/19 P, EU:C:2021:905, paragraph 67 and the case-law cited).

49      In that regard, the Court of Justice has stated that an applicant cannot be required to show that the decision of the EU institution concerned would have been substantively different in the absence of the procedural irregularity in question, but simply that such a possibility cannot be totally ruled out (judgment of 5 May 2022, Zhejiang Jiuli Hi-Tech Metals v Commission, C‑718/20 P, EU:C:2022:362, paragraph 49).

50      However, it does not appear from the file in the present case that the appellant has provided evidence to demonstrate that it could not be totally ruled out that the second decision would have been different in content in the absence of the procedural irregularities which, according to it, vitiated the review procedure (see, by analogy, judgment of 18 June 2020, Commission v RQ, C‑831/18 P, EU:C:2020:481, paragraph 116).

51      Accordingly, the tenth part of the second ground of appeal cannot succeed and must be rejected as unfounded.

 Third part of the second ground of appeal

 Arguments of the parties

52      By the third part of the second ground of appeal, the appellant submits that the General Court found no infringement of its procedural rights in the procedure that led to the second decision without taking into consideration the crucial rule arising from Article 26(1) of the SSM Framework Regulation, according to which the ECB must involve in a procedure not only the party requesting the procedure but also the party to whom the decision concluding the procedure is to be addressed. According to the appellant, it is common ground that the ECB did not involve it in any way during the review procedure.

53      The ECB, supported by the Commission, disputes the appellant’s arguments.

 Findings of the Court

54      According to settled case-law of the Court of Justice, it follows from the second subparagraph of Article 256(1) TFEU, the first paragraph of Article 58 of the Statute of the Court of Justice of the European Union, and Article 168(1)(d) and Article 169(2) of the Rules of Procedure of the Court of Justice that an appeal must, if it is not to be found inadmissible, indicate precisely the contested elements of the judgment which the appellant seeks to have set aside and also the legal arguments specifically advanced in support of that appeal (judgment of 24 March 2022, GVN v Commission, C‑666/20 P, not published, EU:C:2022:225, paragraph 51 and the case-law cited). In the present case, it should be pointed out that the appellant does not indicate the paragraphs of the judgment under appeal that it contests.

55      Even if the appellant’s line of argument can be taken to be referring to paragraphs 396 and 406 of the judgment under appeal, by which the General Court rejected as inadmissible the pleas alleging infringement of the rights of the defence in the review procedure, including the right of the appellant to be involved in that procedure, it must be observed that the appellant has not made any specific legal argument in the third part of the second ground of appeal with regard to paragraph 407 of the judgment under appeal.

56      However, it was in that paragraph of the judgment under appeal that the General Court held that, in any event, even if the pleas in question were admissible, they could not lead to annulment of the decision of 17 July 2018, since, even in the absence of those procedural irregularities, the outcome of the decision would have been the same.

57      In those circumstances, and having regard to the considerations set out in paragraphs 48 to 51 above, the third part of the second ground of appeal is in any event ineffective and must therefore be rejected.

 Fourth part of the second ground of appeal

 Arguments of the parties

58      By the fourth part of the second ground of appeal, the appellant submits that the General Court erred in holding that the appellant was not permitted to plead infringement of the procedural rights of its main shareholder in the review procedure before the ABoR. Such a position amounts to allowing the ECB to rely on its own unlawful action, in breach of the principle nemo auditur propriam turpitudinem allegans.

59      The ECB, supported by the Commission, contests the appellant’s arguments.

 Findings of the Court

60      In that regard, it must be borne in mind that an applicant cannot rely on an irregularity which is not of direct concern to it (order of 17 November 2005, Minoan Lines v Commission, C‑121/04 P, not published, EU:C:2005:695, paragraph 46 and the case-law cited).

61      As is apparent from paragraphs 19 and 401 of the judgment under appeal, it is common ground that the appellant did not submit an application for review of the first decision before the ABoR, that review having been sought only by its main shareholder.

62      Accordingly, the General Court was able to find, correctly, in paragraph 406 of the judgment under appeal that the appellant was not entitled to raise the pleas alleging infringement of the rights of the defence in the review procedure.

63      Consequently, the fourth part of the second ground of appeal must be rejected as unfounded.

 Fifth part of the second ground of appeal

 Arguments of the parties

64      By the fifth part of the second ground of appeal, the appellant submits that the General Court erred in failing to recognise that its procedural rights had been infringed owing to the fact that the ECB had proceeded on the assumption that the appellant was represented by the liquidators, namely by persons whose interests are aligned with those of the ECB.

65      The ECB, supported by the Commission, contends, primarily, that the fifth part of this ground of appeal is inadmissible.

 Findings of the Court

66      As was observed in paragraph 54 above, it is apparent from the provisions cited therein, as interpreted by the settled case-law of the Court of Justice, that an appeal must, if it is not to be found inadmissible, indicate precisely the contested elements of the judgment which the appellant seeks to have set aside and also the legal arguments specifically advanced in support of that appeal.

67      In the present case, contrary to the requirements set out in the preceding paragraph, the appellant’s arguments do not enable the Court to identify the elements of the judgment under appeal that are contested.

68      Consequently, the fifth part of the second ground of appeal must be rejected as inadmissible.

 Sixth part of the second ground of appeal

 Arguments of the parties

69      By the sixth part of the second ground of appeal, the appellant submits that the General Court set out a number of erroneous considerations which show that it had no confidence in its fundamental position that all the procedural issues are irrelevant.

70      The ECB and the Commission contend that this part of the ground of appeal should be rejected as inadmissible.

 Findings of the Court

71      The appellant’s line of argument, characterised by being very general and vague, does not enable the Court to identify the contested elements of the judgment under appeal.

72      The sixth part of the second ground of appeal must therefore also be rejected as inadmissible.

 Seventh part of the second ground of appeal

 Arguments of the parties

73      By the seventh part of the second ground of appeal, the appellant submits that the General Court erred in rejecting as late and therefore inadmissible its plea as to the illegality of the rule in the SSM Framework Regulation laying down a time limit for the exercise of the right to be heard of only three working days in circumstances in which even the formal rights of representation of the appellant had been recognised only extremely belatedly, namely on 5 November 2019, following the judgment of 5 November 2019, ECB and Others v Trasta Komercbanka and Others (C‑663/17 P, C‑665/17 P and C‑669/17 P, EU:C:2019:923).

74      The ECB, supported by the Commission, contends that this part of the ground of appeal must be found to be inadmissible.

 Findings of the Court

75      Although the appellant has made no explicit reference in the seventh part of the second ground of appeal to a particular paragraph of the judgment under appeal, it is nevertheless possible to identify the paragraph of the judgment to which it refers, namely paragraph 375; in that paragraph the General Court rejected as out of time a plea of illegality raised against the provisions of the SSM Framework Regulation alleging that the period prescribed for submitting observations on a proposed withdrawal of authorisation was too short.

76      However, since the appeal, contrary to the requirements set out in paragraph 54 above, provides no indication at all of the error of law purportedly committed by the General Court in that regard, the seventh part of the second ground of appeal must be rejected as inadmissible.

 Eighth part of the second ground of appeal

 Arguments of the parties

77      By the eighth part of the second ground of appeal, the appellant criticises the General Court for erroneously rejecting, in paragraph 381 et seq. of the judgment under appeal, the plea based on the fact that the appellant had not been informed of the resolution decisions relied upon in adopting the first and second decisions, and that those decisions had never been disclosed to it.

78      The ECB, supported by the Commission, contends that this part of the ground of appeal is inadmissible.

 Findings of the Court

79      While the appellant refers explicitly to paragraph 381 et seq. of the judgment under appeal, it has failed to specify the error of law that the General Court allegedly committed in that regard.

80      Consequently, as in paragraph 76 above, the eighth part of the second ground of appeal must be rejected as inadmissible.

 Ninth part of the second ground of appeal

 Arguments of the parties

81      By the ninth part of the second ground of appeal, the appellant claims that the General Court erred in rejecting the plea relating to the duty to state reasons. It states in that regard that the General Court provided entirely new explanations and, in particular, referred to the existence of a Latvian branch and to the fact that customers in Latvia accounted for 66% of the appellant’s income for the period from November 2013 to August 2016.

82      The ECB contends in reply that this part of the ground of appeal must be rejected as inadmissible, while the Commission argues that it is entirely unfounded.

 Findings of the Court

83      It should be observed that in the present case the appeal fails to identify precisely the paragraphs in the grounds of the judgment under appeal which are contested. While it is nevertheless possible to identify one of those paragraphs, namely paragraph 258, which concerns the contribution of the Latvian branch to the appellant’s income, the fact remains that the appeal does not set out any legal arguments substantiating the claim of a failure to state reasons.

84      Consequently, the ninth part of the second ground of appeal must be rejected as inadmissible.

85      Having regard to all the foregoing considerations, the second ground of appeal must be rejected as in part inadmissible and in part unfounded.

 The third ground of appeal

 Arguments of the parties

86      The appellant argues that the General Court erred in considering that the ECB was competent to revoke its authorisation owing to alleged breaches of AML/CFT provisions. The ECB lacks any competence in relation to payment services which, according to the first and second decisions, constituted the appellant’s business.

87      The ECB should merely ensure that the national authorities exercise their powers under national law and in accordance with the AML/CFT provisions of that law, subject to review by the national courts. Article 4(1) of the Basic SSM Regulation does not disapply the principle that national law, including law implementing EU directives, falls within the sole competence of the national authority, subject to review by the national courts. Article 4(3) of that regulation would have a paradoxical effect if it were interpreted as expanding the ECB’s powers as opposed to the ECB being required to comply with national law implementing directives when discharging its responsibilities.

88      According to the appellant, the General Court, in paragraph 144 of the judgment under appeal, seeks to reinterpret the restriction on the potential powers of the national authorities under Article 18 of Directive 2013/36 as a power to propose. However, that directive has no connection with the subsequent rules in the Basic SSM Regulation concerning cooperation between the national competent authority and the ECB in the narrow field of less significant credit institutions, that is to say entities transforming deposits into loans. The national competent authority cannot submit any proposals on matters outside the SSM, such as AML/CFT issues in connection with the provision of payment services or resolution issues and thereby create additional powers for the ECB.

89      In any event, the General Court’s reasoning is erroneous since it involves an implicit misinterpretation of the Estonian law implementing Directive 2013/36. The General Court erred in law by applying Articles 18 and 67 of that directive directly. In that regard, the appellant submits that Article 67(1)(o) of that directive is referring to a valid and final court ruling against which no appeal lies. However, the General Court does not identify any binding decision by the Estonian authorities or courts on the highly contentious issue of potential AML/CFT infringements. The on-site inspection reports, drawn up solely by one person, are not binding acts that may be subject to judicial review.

90      The ECB, supported by the Commission, counters that this ground of appeal is in part inadmissible and in part unfounded.

 Findings of the Court

91      As was stated correctly in paragraph 116 of the judgment under appeal, and contrary to what is claimed by the appellant, the power under Article 4(1)(a) of the Basic SSM Regulation to withdraw authorisation from credit institutions is reserved exclusively to the ECB.

92      The General Court was also correct in pointing out, in paragraph 117 of the judgment under appeal, that Article 4(3) of the Basic SSM Regulation provides that for the purpose of carrying out the tasks conferred on it by that regulation, and with the objective of ensuring high standards of supervision, the ECB is to apply all relevant EU law, and where the EU law is composed of directives, the national legislation transposing those directives.

93      In addition, as stated in paragraph 122 of the judgment under appeal, Article 14(5) of the Basic SSM Regulation provides that the ECB may withdraw the authorisation in the cases set out in relevant EU law on its own initiative, following consultations with the national competent authority of the participating Member State where the credit institution is established, or on a proposal from such a national competent authority.

94      It should also be observed that the General Court was correct to consider, in paragraphs 132 and 133 of the judgment under appeal, that the overall scheme of Article 6(4) to (6) of the Basic SSM Regulation establishes a differentiation between prudential supervision of ‘significant’ entities and that of entities classified as ‘less significant’ in relation to seven of the nine tasks listed in Article 4(1) of that regulation, and that it follows therefrom, inter alia, that not only does the exclusive competence for the prudential supervision of ‘significant’ entities fall to the ECB, but that the same holds true for the prudential supervision of ‘less significant’ entities in relation to the task listed in Article 4(1)(a) of the Basic SSM Regulation concerning the authorisation and withdrawal of authorisation to credit institutions.

95      As regards, more specifically, the withdrawal of authorisation from a credit institution provided for in Article 4(1)(a) of the Basic SSM Regulation, it was rightly observed in paragraph 140 of the judgment under appeal that the cooperation between the ECB and the national competent authorities is expressed, in accordance with Article 14(5) of that regulation, first, by the obligation to consult those authorities, in the event that the ECB withdraws the authorisation on its own initiative and, secondly, in the possibility that those authorities have to propose such a withdrawal to the ECB.

96      In addition, as regards the link between AML/CFT and prudential supervision, the General Court rightly pointed out, in paragraph 143 of the judgment under appeal, that, among the circumstances justifying withdrawal of a banking authorisation, first, Article 18(f) of Directive 2013/36 mentions the breaches referred to in Article 67(1) of that directive, which include serious breaches of the national provisions adopted pursuant to Directive 2005/60 on the prevention of the use of the financial system for the purposes of money laundering and terrorist financing. Secondly, Article 18(e) of that directive mentions the other cases in which national law provides for withdrawal of authorisation.

97      In that regard, it was held correctly in paragraph 187 of the judgment under appeal that although the Member States remain competent to implement the AML/CFT provisions, as expressly provided for in recital 28 of the Basic SSM Regulation, the ECB has exclusive competence to withdraw authorisation, for all credit institutions, irrespective of their size, even where such competence is based, as in the present case, on the grounds set out in Article 67(1)(d), (e) and (o) of Directive 2013/36, to which Article 18 of that directive refers, since Article 14(5) of that regulation lays down, as a condition for the withdrawal of authorisation, the existence of one or more grounds justifying withdrawal under Article 18 of that directive. Accordingly, the ECB’s competence to adopt the decision of 17 July 2018 cannot, on that ground, be called into question.

98      Consequently, in the light of the foregoing, the General Court, first, did not err in law in noting, in paragraph 144 of the judgment under appeal, that, although Article 18 of Directive 2013/36 refers to the power of national competent authorities to withdraw authorisations, in view of the distribution of tasks between those authorities and the ECB, provided for in Article 4 of the Basic SSM Regulation, and particularly in view of the fact that the power to withdraw authorisation has become an exclusive competence of the ECB, which the ECB may exercise, pursuant to Article 14(5) of that regulation, on a proposal from a national competent authority, Article 18 of that directive must be understood as referring to the power to propose the withdrawal of authorisation, which remains with the national competent authorities.

99      Second, the General Court likewise did not err in law in holding, in paragraph 197 of the judgment under appeal, that it was without disregarding the division of powers between the national competent authorities of the participating Member States and the ECB under the SSM that, in the present case, the legal assessment intended to determine whether the facts constituting breaches of the AML/CFT legislation established by the FSA justified withdrawal of authorisation was reserved for the ECB.

100    As regards the appellant’s argument alleging, in essence, that the ECB was not entitled to apply national law because the EU Courts do not have jurisdiction to review the legality of decisions by the ECB applying national law, it must be stated, as the ECB submits, that that argument was not raised before the General Court.

101    According to the settled case-law of the Court of Justice, since, in an appeal, the oversight of the Court of Justice is confined to a review of the findings of law on the pleas argued before the General Court, a party cannot put forward for the first time before the Court of Justice an argument which it has not raised before the General Court. To allow appellants to raise for the first time before the Court of Justice arguments which they have not made before the General Court would be to allow them to bring before the Court of Justice, whose jurisdiction in appeal proceedings is limited, a wider case than that heard by the General Court (order of 15 September 2022, CNMSE and Others v Parliament and Council, C‑749/21 P, not published, EU:C:2022:699, paragraphs 19 and 20 and the case-law cited).

102    Furthermore, as stated in paragraph 92 above, the ECB, for the purpose of carrying out the tasks conferred on it by the Basic SSM Regulation, is to apply, inter alia, the national legislation transposing the relevant directives.

103    Accordingly, the argument in question must, in any event, be rejected as unfounded.

104    As regards the appellant’s contention that the ECB had no competence to withdraw its authorisation since its business consisted of payment services, that argument, as the ECB submits, is a new argument since it was not raised before the General Court. Accordingly, it must be rejected as inadmissible.

105    Lastly, for the same reason, it is necessary to reject as inadmissible the argument that, in essence, the withdrawal of a banking authorisation pursuant to Article 67(1)(o) of Directive 2013/36 cannot be based on findings contained in an on-site inspection report, but requires a valid and final court ruling against which no appeal lies declaring that the entity concerned is responsible for serious breaches of AML/CFT rules.

106    In the light of all the foregoing considerations, the third ground of appeal must be rejected as in part unfounded and in part inadmissible.

 The fourth ground of appeal

 Arguments of the parties

107    The appellant submits that in paragraphs 237 to 268 of the judgment under appeal, the General Court breached the principle of legal certainty and the allocation of competences between the Courts of the European Union and the national courts by failing to recognise that the allegation of an infringement of Latvian law by means of the illegal operation of a branch in Latvia is a precluded issue in so far as it was the subject of an administrative judicial settlement with the competent authority, namely the FKTK, before the competent national court and with the approval of that court; that settlement has the same effect as if that court had determined in a final judgment that there was no such branch in Latvia.

108    The General Court erred in failing to take account of the fact that only the FKTK and the Latvian court in question have competence to make a finding that an illegal branch allegedly existed in Latvia. Neither the FSA, the ECB nor the General Court could not make any determination on that issue, even in the absence of the settlement, simply because, as an issue of Latvian law, it is outside their competence.

109    In addition, the General Court did not specify the source on which it bases its finding, disputed by the appellant and set out in paragraphs 258 to 260 of the judgment under appeal, that 66% of the appellant’s income for the period from November 2013 to August 2016 was attributable to customers in Latvia. The General Court also erred in law by assuming, in arriving at that figure of 66%, that the place of residence of the customer is per se relevant for finding the existence of a branch. The General Court’s findings in that regard are unlawful in terms of procedure since they are based on documents that were submitted very late and on which the appellant was not given any opportunity to comment by the General Court.

110    The ECB, supported by the Commission, contends that this ground of appeal is in part inadmissible and in part unfounded.

 Findings of the Court

111    It should be observed that, as stated in paragraph 237 of the judgment under appeal, the appellant, as regards the illegal operation of a branch in Latvia, argued before the General Court that the question relating to the ‘passporting’ procedure for undertaking cross-border activities in other countries, a procedure which it failed to follow, was now irrelevant, since that issue had been the subject of a settlement agreement before a Latvian administrative court and neither the FSA nor the Latvian national competent authority had imposed sanctions on it in that regard.

112    In that respect, it should be pointed out that, after observing, in paragraph 257 of the judgment under appeal, that the appellant had established a branch in Latvia and carried out financial activities unlawfully because it had infringed the notification procedure, known as ‘passporting’, the General Court found, in paragraph 266 of that judgment, that the administrative judicial settlement at issue was not capable of legalising the appellant’s unlawful conduct in the past, but only of preventing any further measures, including penalties, in the future.

113    Accordingly, the General Court considered that, despite the administrative judicial settlement, the fact that the ‘passporting’ procedure had been infringed was of relevance for its rejection, in paragraph 268 of the judgment under appeal, the plea raised by the appellant.

114    However, in claiming in its appeal that the General Court breached the principle of legal certainty and the allocation of competences between the Courts of the European Union and the national courts by failing to recognise that the allegation of an infringement of Latvian law by means of the illegal operation of a branch in Latvia was a precluded issue in so far as it had been the subject of a settlement with the competent authority, the appellant has raised an argument that was not previously relied on before the General Court. In the light of the case-law referred to in paragraph 101 above, such an argument must be rejected as inadmissible.

115    As regards the appellant’s argument, summarised in paragraph 109 above, it must be found, as the ECB has stated before the Court of Justice, that the figures given in paragraphs 258 and 260 of the judgment under appeal were included in the ECB’s statements in defence relating to Cases T‑351/18 and T‑584/18, such that the appellant – who thus had the possibility of challenging them in the proceedings at first instance, without, however, making use of that possibility – is not entitled to do so in the appeal. In any event, it does not adduce any evidence capable of calling those figures into question.

116    Lastly, as regards the argument based on an alleged error of law by the General Court in finding that the place of residence of the customer is per se relevant for finding that a branch exists, it must be held that that argument is based on a misreading of paragraphs 258 to 260 of the judgment under appeal. While it is true that the General Court noted in paragraph 260 of the judgment that 3% of the accounts opened with that branch were held by Latvian residents, it nevertheless remains the case, as is apparent from paragraphs 258 and 259 of that judgment, that the General Court relied on the fact that Latvian customers and customers from third countries, recruited in Latvia, had generated, between November 2013 and August 2016, 66% of the total income from services provided by the appellant and that, therefore, the branch in Latvia could not constitute a mere representative or support office.

117    Consequently, this argument must be rejected as unfounded.

118    Having regard to the foregoing considerations, the fourth ground of appeal must be rejected as partly inadmissible and partly unfounded.

 The fifth ground of appeal

 Arguments of the parties

119    According to the appellant, the General Court erred in law in assuming that the resolution matters at issue in the present case are governed by the SRM Regulation or are based on an analogous application of that regulation, when in fact such matters are governed by the provisions of Estonian national law implementing Directive 2014/59 and by other provisions of Estonian law.

120    Nor did the General Court appropriately address the appellant’s plea with respect to the ECB’s decision not to permit self-liquidation, even though a decision otherwise would have eliminated any need for a withdrawal of authorisation.

121    Lastly, the General Court erred in holding that it was necessary to apply for permission for self-liquidation, even though neither the SRM Regulation nor Directive 2014/59 require such permission.

122    The ECB, supported by the Commission, contends that this ground of appeal is in part inadmissible and, in any event, unfounded.

 Findings of the Court

123    It should be observed that the appellant’s first argument, as both the ECB and the Commission contend, is imprecise in that it neither identifies nor makes it possible to identify the paragraphs of the judgment under appeal which are challenged.

124    Consequently, in the light of the case-law referred to in paragraph 54 above, that argument must be rejected as inadmissible.

125    As regards the second argument raised by the appellant, while that argument does make it possible – despite the fact that it fails to refer to the paragraphs of the judgment under appeal that are contested – to identify those paragraphs as paragraphs 200 to 204 thereof, the fact remains that it is too general and vague to allow for an understanding of the error of law that the General Court, in the appellant’s view, might have committed in that regard. Indeed, all the appellant claims in this instance is that the General Court did not appropriately address its plea concerning the ECB’s decision not to permit self-liquidation.

126    It follows that that argument must also be rejected as inadmissible.

127    As regards the third argument, it should be observed that paragraph 201 of the judgment under appeal is worded as follows:

‘As a preliminary point, as regards the self-liquidation of the … applicant, it should be noted that, under Article 117 of the Estonian Law on Credit Institutions, in order to self-liquidate, a credit institution must submit an application for voluntary liquidation to the FSA, which is therefore the authority competent to either accept or reject such an application.’

128    The appellant’s argument, set out in paragraph 121 above, is not capable of calling into question the finding made by the General Court in paragraph 201 of the judgment under appeal. Indeed, such a finding does not conflict with the fact that neither the SRM Regulation nor Directive 2014/59 requires an application to be made for the authorisation of self-liquidation. Moreover, it is apparent from paragraph 108 of the judgment under appeal that the appellant itself accepted that the possibility of self-liquidation is recognised under all national law.

129    Consequently, since that argument is unfounded, it must be rejected.

130    Having regard to the foregoing considerations, the fifth ground of appeal must be rejected as partly inadmissible and partly unfounded.

 The sixth ground of appeal

 Arguments of the parties

131    The appellant claims that the General Court committed four procedural errors.

132    The first procedural error consists in the General Court failing to respect the limits of its own competence under Article 263 TFEU, which is to review acts of the ECB within the strict framework established by that article, that is to say, in the light of EU law and of any substantive and procedural errors committed by the ECB. The General Court made determinations on issues which, being governed by national law, fall within the exclusive competence of the national competent authorities and courts, in particular in relation to payment services, other financial services, AML/CFT issues, resolution matters and the enforcement of the prohibition of illegal activities such as illegal branches. In particular, the General Court was not empowered to decide the disputes relating to the alleged breaches of AML/CFT rules and to the existence in the past of an allegedly illegal branch.

133    Moreover, action by the ECB going beyond its competences does not expand the powers of the General Court. Article 263 TFEU prescribes that in such cases the act at issue adopted by the EU institution must be annulled for lack of competence. That question should be raised by the EU Courts of their own motion.

134    The second procedural error arises from the fact, first, that the judgment under appeal is based decisively on documents that were submitted very late, despite the appellant’s objections submitted in that regard at the hearing and without the appellant having had any opportunity to comment, and, second, from the fact that there were no relevant English translations, even at the time of the first and second decisions; as a result the appellant’s rights under Article 47 of the Charter of Fundamental Rights of the European Union (‘the Charter’) were clearly infringed.

135    The third procedural error stems from the General Court’s failure to take into consideration either the infringement of the appellant’s rights under Article 47 of the Charter before the beginning of the proceedings, or the continued lack of access for its representatives to the appellant’s premises and, therefore, the lack of effective representation of the appellant during the proceedings. The appellant’s former chief executive officer discharged the role of representative of the appellant solely in his private time, at his own expense and with no access to the bank. The lack of recognition of the appellant’s representation rights in the past had, moreover, meant that the action before the General Court had to be prepared in a very short period of time and on the basis of limited telephone conversations.

136    The appellant submits that the fourth procedural error consists of the General Court failing to order the production of the ‘FOLTF decisions’, especially in the light of the extensive discussion of those decisions in the judgment under appeal and the manifest error as to their legal basis. Lastly, the rejection of requests for the production of other documents as being late was not appropriate in the light of the extreme difficulties which affected the defence of the appellant’s rights.

137    The ECB contends, primarily, that the first, third and fourth parts of the sixth ground of appeal are inadmissible. In any event, this ground of appeal is unfounded. The Commission, for its part, argues that the second to fourth parts of the ground of appeal are inadmissible. In any event, it is unfounded.

 Findings of the Court

138    As regards the first part of this ground of appeal, reference should be made to paragraphs 95 to 97 above.

139    According to those paragraphs, as regards the withdrawal of authorisation from a credit institution provided for in Article 4(1)(a) of the Basic SSM Regulation, it was rightly observed in paragraph 140 of the judgment under appeal, that the cooperation between the ECB and the national competent authorities is expressed, in accordance with Article 14(5) of that regulation, first, by the obligation to consult those authorities, in the event that the ECB withdraws the authorisation on its own initiative and, secondly, in the possibility that those authorities have to propose such a withdrawal to the ECB.

140    In addition, as regards the link between AML/CFT and prudential supervision, the General Court rightly pointed out, in paragraph 143 of the judgment under appeal, that, among the circumstances justifying withdrawal of a banking authorisation, first, Article 18(f) of Directive 2013/36 mentions the breaches referred to in Article 67(1) of that directive, which include serious breaches of the national AML/CFT provisions adopted pursuant to Directive 2005/60. Secondly, Article 18(e) of Directive 2013/36 mentions the other cases in which national law provides for withdrawal of authorisation.

141    Lastly, it was held correctly in paragraph 187 of the judgment under appeal that although the Member States remain competent to implement the AML/CFT provisions, as expressly provided for in recital 28 of the Basic SSM Regulation, the ECB has exclusive competence to withdraw authorisation, for all credit institutions, irrespective of their size, even where such competence is based, as in the present case, on the grounds set out in Article 67(1)(d), (e) and (o) of Directive 2013/36, to which Article 18 of that directive refers, since Article 14(5) of that regulation lays down, as a condition for the withdrawal of authorisation, the existence of one or more grounds justifying withdrawal under Article 18 of that directive. Accordingly, the appellant cannot properly question, on that ground, the ECB’s competence to adopt the decision of 17 July 2018.

142    Consequently, just as the appellant cannot properly question the ECB’s competence to adopt the decision of 17 July 2018, based in particular on serious breaches of national AML/CFT provisions adopted pursuant to Directive 2005/60, it also cannot properly question the competence of the General Court in that regard.

143    As regards the alleged lack of competence of the General Court to adopt a position in other areas governed by national law, in particular as regards payment services, other financial services, resolution matters and the enforcement of the prohibition of illegal activities such as illegal branches, it is important to point out, first, that the appellant did not argue before the General Court that the ECB had no competence in those areas and, second, that the appellant’s line of argument on that issue is imprecise and does not make it possible to identify the paragraphs of the judgment under appeal to which the appellant refers.

144    In those circumstances, the first part of this ground of appeal must be rejected as in part inadmissible and in part unfounded.

145    As regards the second part of this ground of appeal, it must be found that the appellant has failed to identify any paragraph of the judgment under appeal which is based decisively on documents placed on the file in an allegedly irregular manner and the nature and content of which are not specified.

146    Such failings render that part of the ground of appeal inadmissible.

147    As regards the third part of this ground of appeal, it must be pointed out that, inasmuch as it alleges that the General Court did not in any way take into consideration an infringement of the appellant’s rights under Article 47 of the Charter before the beginning of the proceedings, it also fails to satisfy the requirements of precision referred to in paragraph 54 above.

148    Consequently, that part of the ground of appeal is inadmissible in that respect.

149    Inasmuch as it alleges that the General Court did not take into consideration the continuing lack of access to the appellant’s premises and, therefore, the lack of effective representation of the appellant during the proceedings, the third part of the sixth ground of appeal constitutes a new argument, since it was not raised before the General Court.

150    Consequently, in the light of the case-law referred to in paragraph 101 above, that part of the ground of appeal must also be rejected as inadmissible in that respect.

151    Accordingly, the third part of the sixth ground of appeal must be rejected in its entirety as inadmissible.

152    As far as the fourth part of the sixth ground of appeal is concerned, it should be observed that while it does not explicitly state which paragraphs of the judgment under appeal are meant, it does allow paragraphs 416 and 419 of the judgment under appeal to be identified in this instance as those to which it refers.

153    Paragraphs 415, 416 and 419 of the judgment under appeal are worded as follows:

‘415      It is apparent from Article 88(2) [of the Rules of Procedure of the General Court] that the application referred to in paragraph 1 thereof must state precisely the purpose of the measures sought and the reasons for them. In addition, that provision states that, where the application is made after the first exchange of pleadings, the party submitting that application must state the reasons for which he or she was unable to submit it earlier.

416      In the present case, most of the requests for measures of inquiry, with the exception of the request for production of the “FOLTF decisions”, were made for the first time at the reply stage. The applicants do not in any way explain in their application the reasons for this delay. Consequently, those applications must be rejected as inadmissible.

…

419      … so far as the requests for the production of documents are concerned … as regards the “FOLTF decisions” (the only application for measures of inquiry lodged at the application stage and therefore not out of time), it must be rejected on the basis of the considerations set out in paragraph 181 above. …’

154    However, the appellant has failed to set out the legal arguments that support the fourth part of the sixth ground of appeal.

155    It follows that that part of the ground of appeal must be rejected as inadmissible.

156    Having regard to the foregoing considerations, the sixth ground of appeal must be rejected as partly inadmissible and partly unfounded.

 The first ground of appeal and the second part of the second ground

 Arguments of the parties

157    As regards the first ground of appeal and the second part of the second ground of appeal – alleging that the General Court erred in law in holding that there was no need to adjudicate on the action for annulment of the decision of 26 March 2018 – the appellant argues, in the first place, that the ECB was not entitled to find that the second decision replaced the first decision with effect from the date of notification of the first decision, since that would be contrary to Article 24 of the Basic SSM Regulation, the operating rules of the ABoR, Article 263 TFEU and Article 47 of the Charter. In the second place, the appellant claims that it retains an interest in obtaining the annulment of the first decision, even though it was replaced legally with retroactive effect by the second decision.

158    The ECB, supported by the Commission, contend that the first ground of appeal and the second part of the second ground should be rejected.

 Findings of the Court

159    In accordance with the settled case-law of the Court of Justice, an applicant’s interest in bringing proceedings must, in the light of the purpose of the action, exist at the stage of lodging the action, failing which the action will be inadmissible. That purpose must, like the interest in bringing proceedings, continue until the final decision, failing which there will be no need to adjudicate, which presupposes that the action or, as the case may be, the appeal, must be liable, if successful, to procure an advantage for the party bringing it (judgments of 28 May 2013, Abdulrahim v Council and Commission, C‑239/12 P, EU:C:2013:331, paragraph 61, and of 4 September 2018, ClientEarth v Commission, C‑57/16 P, EU:C:2018:660, paragraph 43 and the case-law cited).

160    The question whether an applicant retains his or her interest in bringing proceedings must be assessed in the light of the specific circumstances, taking account, in particular, of the consequences of the alleged unlawfulness and of the nature of the damage claimed to have been sustained (judgment of 28 May 2013, Abdulrahim v Council and Commission, C‑239/12 P, EU:C:2013:331, paragraph 65).

161    In the present case, it is common ground that the appellant had an interest in bringing proceedings when it lodged its action for annulment of the first decision before the General Court.

162    As observed in paragraph 29 above, the first and second decisions are identical in content.

163    In addition, the action for annulment brought by the appellant against the second decision (Case T‑584/18) reproduced all the pleas and arguments included in the action for annulment brought against the first decision (Case T‑351/18).

164    Consequently, it must be found that the General Court, in the judgment under appeal, ruled on all the arguments put forward by the appellant with regard, also, to the first decision.

165    The appellant had the possibility, which it has used, to lodge an appeal against that judgment.

166    Nevertheless, all the grounds of the appeal, as results from the foregoing considerations, have been rejected.

167    Consequently, if the first ground of appeal and the second part of the second ground of appeal were upheld, the General Court would be required to rule, for a second time, on the same pleas and arguments that the appellant had raised.

168    However, the Court of Justice has rejected all the grounds of the appeal and the appellant does not specify the advantage it could gain from the General Court delivering such a second judgment concerning a decision that is identical and pleas and arguments that are identical.

169    In those particular circumstances, it does not appear that the upholding of the first ground of appeal and the second part of the second ground of appeal is liable, by being successful, to procure an advantage for the appellant.

170    It follows that, in the present case, there is no need to rule on the first ground of appeal and the second part of the second ground of appeal.

171    Since none of the grounds raised in support of the appeal has been upheld, the appeal must be dismissed in its entirety.

 Costs

172    In accordance with Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is unfounded, the Court is to make a decision as to the costs. Under Article 138(1) of those rules, applicable to appeal proceedings by virtue of Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.

173    Since the appellant has been unsuccessful, it must be ordered, in accordance with the form of order sought by the ECB, to bear its own costs and to pay those incurred by the ECB.

174    In accordance with Article 140(1) of the Rules of Procedure, applicable to appeal proceedings by virtue of Article 184(1) thereof, under which Member States and institutions which have intervened in the proceedings are to bear their own costs, the Commission is to bear its own costs.

On those grounds, the Court (First Chamber) hereby:

1.      Dismisses the appeal;

2.      Orders Versobank AS to bear its own costs and to pay those incurred by the European Central Bank (ECB);

3.      Orders the European Commission to bear its own costs.

Delivered in open court in Luxembourg on 7 September 2023.

*      Language of the case: English.

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