A small shareholder defeats the ECB: the Carige commissioner canceled

A small shareholder knocks out the powerful ECB. The Court of the European Union annulled the decision of the European Central Bank which placed Banca Carige in extraordinary administration, a decision which dates back to January 2019, and the subsequent decision of March 2019, which extends its duration until 30 September 2019. Court considers that the ECB committed an error of law in determining the legal basis used to adopt the contested decisions. As for the other subsequent decisions extending the measure, the Court states that they are not the subject of the appeal as they were adopted following the filing of the application for annulment. An appeal, limited to questions of law, may be brought before the Court of Justice of the European Union against a decision of the General Court within two months and ten days from the date of its notification.

What the practical consequences of the sentence will be is difficult to say. Banca Carige has in the meantime been taken over by Bper and the merger between the two banks has already been approved and will soon become fully operational. Certainly in the event of confirmation even in the second instance, it will be an extra weapon in the hands of the Malacalza family, already a relative majority shareholder, in the lawsuit against the ECB itself with a claim for damages for over 480 million euros. Cause whose sentence is expected next year.

The appeal that the EU Court dealt with on this occasion was presented by Francesca Corneli, a minority shareholder in Carige. Given that the bank had accumulated losses of over € 1.6 billion between December 2014 and January 1, 2019, the ECB adopted an intervention measure that set targets to be achieved between 2017 and 2019 for non-performing loans and its coverage. The activities carried out by the bank to achieve the objectives were unsuccessful. During the general meeting of 22 December 2018, the proposal to increase the share capital was objected to by the shareholders who held 70% of the share capital. Following these events, the president, the vice president, the general manager and the majority of the directors resigned, thus leading to the forfeiture of the board of directors.

On January 1, 2019, the ECB decided to place the bank in extraordinary administration with a series of effects: dissolution of the bank’s board of directors and replacement of the old members with three temporary directors, including Modiano and Innocenzi, who had respectively been president of the board of directors and general manager of that institute; dissolution of the bank’s supervisory committee and replacement of former members by three other persons; entrusting the new bodies with the task of taking the necessary measures to ensure that the bank re-complies with the capital requirements on a lasting basis. With subsequent decisions of the ECB, the extraordinary administration was extended until January 31, 2020.