Provisional text
OPINION OF ADVOCATE GENERAL
RICHARD DE LA TOUR
delivered on 13 June 2024 (1)
Case C‑118/23
Rada Nadzorcza Getin Noble Bank,
Getin Holding S.A.,
LC Corp BV,
Fundacja Jolanty i Leszka Czarneckich z siedzibą w Warszawie,
NM,
IJ,
OP,
DL,
US,
AB,
SQ,
KP,
MP,
MZ,
CP,
MD,
GW,
ZD,
IB,
JJ,
KG,
WG,
JS,
KB,
MM,
MT,
MG,
GK,
QP,
KM,
LN,
CK,
MK
WK,
KA,
AU,
BX,
SJ,
ML,
MT,
LP,
PS,
SP,
DG,
GM,
IJ,
LL,
PJ,
WJ,
JG,
OT,
BK,
HH,
HB,
GK,
RS,
CE,
ET,
IK,
NO,
BI,
TM,
CJ,
SN,
DI,
EO,
GL,
PA,
TN,
EQ,
PB,
LT,
LS,
NA,
PR,
IN,
IT,
TK,
LE,
NB,
SE,
KL,
BD,
RR,
RL,
IO,
BV,
TA,
TS,
AA,
MB,
YN,
IC,
EZ,
UB,
AM,
MP,
DJ,
VE,
XL,
OA,
IW,
DL,
NG,
UH,
CI,
RG,
RL,
SI,
OS,
NS,
BA,
NP,
PQ,
IY,
TG,
BE,
RN,
SL,
WE,
RY,
DL,
EO,
OR,
AW,
VQ,
QR,
SC,
RI
v
Bankowy Fundusz Gwarancyjny,
intervener
VELOBANK S.A.,
M.K., acting as liquidator of Getin Noble Bank S.A. (in liquidation), formerly Getin Noble Bank S.A.,
TD
(Request for a preliminary ruling from the Wojewódzki Sąd Administracyjny w Warszawie (Regional Administrative Court, Warsaw, Poland))
(Reference for a preliminary ruling – Recovery and resolution of credit institutions – Bank subject to resolution proceedings – Combining the functions of the resolution authority – Ensuring operational independence)
I. Introduction
1. The request for a preliminary ruling concerns the interpretation of the second subparagraph of Article 19(1) TEU, of Article 47 of the Charter of Fundamental Rights of the European Union, (2) and of Articles 3(3) and 85(2) and (3) of 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/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council. (3)
2. The present request has been made in proceedings between the Supervisory Board of Getin Noble Bank S.A. (‘GN Bank’) and a large number of natural and legal persons, on the one hand, and Bankowy Fundusz Gwarancyjny (Bank Guarantee Fund, Poland; ‘the BGF’), on the other, concerning the BGF’s decision to open resolution proceedings in respect of GN Bank.
3. In the present Opinion, which, in accordance with the Court of Justice’s request, will focus on the third and fourth questions referred for a preliminary ruling, I will establish, first, that the functions of temporary administrator and guarantor of bank deposits are ‘other functions’ which may be exercised by a resolution authority, subject to compliance with certain requirements designed to ensure operational independence between those functions and the resolution function and, second, that the relevant internal rules necessary to comply with those requirements may be adopted and made public by the Member States or by the resolution authorities.
II. Legal framework
A. European Union law
1. Regulation (EU) No 575/2013
4. Article 2(1) and (2) 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 amending Regulation (EU) No 648/2012, (4) as amended by Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019, (5) provides:
‘1. For the purpose of ensuring compliance with this Regulation, competent authorities shall have the powers and shall follow the procedures set out in Directive 2013/36/EU [(6)] and in this Regulation.
2. For the purpose of ensuring compliance with this Regulation, resolution authorities shall have the powers and shall follow the procedures set out in Directive [2014/59] and in this Regulation.’
5. Under point 40 of Article 4(1) of that regulation:
‘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’.
2. Directive 2014/59
6. Point 40 of Article 2(1) of Directive 2014/59 provides:
‘For the purposes of this Directive:
…
40. “resolution action” means the decision to place an institution or entity referred to in point (b), (c) or (d) of Article 1(1) under resolution pursuant to Article 32 or 33, the application of a resolution tool, or the exercise of one or more resolution powers’.
7. Article 3 of the directive, entitled ‘Designation of authorities responsible for resolution’, provides, in paragraphs 3 and 4:
‘3. Resolution authorities may be national central banks, competent ministries or other public administrative authorities or authorities entrusted with public administrative powers. Member States may exceptionally provide for the resolution authority to be the competent authorities for supervision for the purposes of Regulation [No 575/2013] and Directive [2013/36]. Adequate structural arrangements shall be in place to ensure operational independence and avoid conflicts of interest between the functions of supervision pursuant to Regulation [No 575/2013] and Directive [2013/36] or the other functions of the relevant authority and the functions of resolution authorities pursuant to this Directive, without prejudice to the exchange of information and cooperation obligations as required by paragraph 4. In particular, Member States shall ensure that, within the competent authorities, national central banks, competent ministries or other authorities there is operational independence between the resolution function and the supervisory or other functions of the relevant authority.
The staff involved in carrying out the functions of the resolution authority pursuant to this Directive shall be structurally separated from, and subject to, separate reporting lines from the staff involved in carrying out the tasks pursuant to Regulation [No 575/2013] and Directive [2013/36] or with regard to the other functions of the relevant authority.
For the purposes of this paragraph, the Member States or the resolution authority shall adopt and make public any necessary relevant internal rules including rules regarding professional secrecy and information exchanges between the different functional areas.
4. Member States shall require that authorities exercising supervision and resolution functions and persons exercising those functions on their behalf cooperate closely in the preparation, planning and application of resolution decisions, both where the resolution authority and the competent authority are separate entities and where the functions are carried out in the same entity.’
8. Under Article 29(1) to (3) of Directive 2014/59:
‘1. … Competent authorities may, based on what is proportionate in the circumstances, appoint any temporary administrator either to replace the management body of the institution temporarily or to work temporarily with the management body of the institution and the competent authority shall specify its decision at the time of appointment. If the competent authority appoints a temporary administrator to work with the management body of the institution, the competent authority shall further specify at the time of such an appointment the role, duties and powers of the temporary administrator and any requirements for the management body of the institution to consult or to obtain the consent of the temporary administrator prior to taking specific decisions or actions. … Member States shall further ensure that any temporary administrator … is free of any conflict of interests.
2. The competent authority shall specify the powers of the temporary administrator at the time of the appointment of the temporary administrator based on what is proportionate in the circumstances. Such powers may include some or all of the powers of the management body of the institution under the statutes of the institution and under national law, including the power to exercise some or all of the administrative functions of the management body of the institution …
3. The role and functions of the temporary administrator shall be specified by [the] competent authority at the time of appointment and may include ascertaining the financial position of the institution, managing the business or part of the business of the institution with a view to preserving or restoring the financial position of the institution and taking measures to restore the sound and prudent management of the business of the institution. The competent authority shall specify any limits on the role and functions of the temporary administrator at the time of appointment.’
B. Polish law
1. Law on Banking
9. Article 144(1), (1a), (3) and (4) of the ustawa Prawo bankowe (Law of 29 August 1997 on Banking ), (7) in the version applicable to the facts of the main proceedings, provides:
‘1. In a case referred to in Article 138(3), on account of circumstances set out in Article 142(1), the Komisja Nadzoru Finansowego (Financial Supervision Authority, Poland; ‘the FSA’) may, subject to Article 5(6) of the [ustawa o Bankowym Funduszu Gwarancyjnym, systemie gwarantowania depozytów oraz przymusowej restrukturyzacji (Law of 10 June 2016 on the Bank Guarantee Fund, Deposit Guarantee Scheme and Resolution)], (8) take a decision to appoint an insolvency administrator [(9)] at the bank, in order to improve the situation of the bank or ensure the effectiveness of the recovery plan implemented.
1a. In a case referred to in paragraph 1, the [FSA] shall specify in the decision the detailed scope of the tasks of the insolvency administrator.
…
3. The insolvency administrator shall have the right to object to resolutions and decisions of the bank’s management board and supervisory board. A statement of intention to object made at a meeting of the supervisory board or the management board shall suspend the implementation of the resolution or decision concerned.
4. The insolvency administrator may challenge a resolution of the general meeting of shareholders or a resolution of the general meeting of a cooperative bank which infringes the bank’s interest …’
2. Law on the bank guarantee fund, deposit guarantee scheme and resolution
10. Article 5(1), (3) and (6) of the Law on the bank guarantee fund, deposit guarantee scheme and resolution, in the version applicable to the facts in the main proceedings, provides:
‘1. The [BGF] shall be engaged in the following tasks:
(1) performance of the obligations arising from the deposit guarantee, in particular, paying guaranteed funds to depositors;
(2) control of the data contained in the calculation system of the entities covered by the deposit guarantee scheme;
(3) restructuring of entities referred to in Article 64 point 2 by write down or conversion of capital instruments;
(4) pursuit of compulsory resolution;
(5) preparation, review and update of resolution plans and group resolution plans;
(6) collection and analysis of information on entities covered by the deposit guarantee scheme and mortgage banks, in particular for the preparation of analyses and forecasts for the banking sector and credit union sector and individual banks and credit unions;
(7) pursuit of other duties in favour of the stability of the domestic financial system.
…
3. The [BGF] shall cooperate with other entities acting for the stability of the domestic financial system, entities operating deposit guarantee schemes, as well as with the competent authorities for resolution, the European Banking Authority and the competent authorities for resolution of a group, the competent authorities for resolution of significant branches, the competent authorities for compulsory resolution of subsidiaries and the competent third-country authorities for resolution.
…
6. At the request of the [BGF], the [FSA] shall appoint the [BGF] as insolvency administrator within the meaning of Article 144(1) of the Law on Banking …’
11. Article 101(1), (6) and (7) of the Law on the bank guarantee fund, deposit guarantee scheme and resolution provides:
‘1. The [FSA] shall notify the [BGF] without delay of the following:
(1) a threat of an entity becoming insolvent;
(2) the absence of indications that the supervisory measures that can be taken or the measures of that entity will allow that risk to be removed in good time.
…
6. The [FSA] shall provide the information referred to in paragraph 1 also to:
…
(6) the management authority of a recognised deposit guarantee scheme in the State in whose territory the parent entity is established;
(7) management entities of resolution funds in the State in whose territory the parent entity is established, if the fund is not managed by the competent authority for resolution of a group;
…
7. If all of the following conditions have been satisfied:
(1) a national entity is at risk of becoming insolvent,
(2) there are no reasonable indications that action by the national entity or the institutional protection scheme or supervisory action, including early intervention measures, will allow the risk of insolvency to be removed in good time,
(3) action in respect of the national entity is necessary in the public interest
- the [BGF] shall take a decision to initiate resolution in respect of the national entity or a decision to write down or convert capital instruments or eligible liabilities …’
12. Article 137(1) of that law provides:
‘Prior to adopting the resolution decision, the [BGF] shall ensure that an estimate is made of the value of the entity’s assets and liabilities.’
III. The facts of the dispute in the main proceedings and the questions referred for a preliminary ruling
13. On account of GN Bank’s failure to comply with the minimum requirements set out in Article 92 of Regulation No 575/2013, by a decision of 22 December 2021 the FSA, on the basis of Article 144(1) and (1a) of the Law on Banking , appointed the BGF as temporary administrator (‘curator’ or ‘insolvency administrator’) (10) at GN Bank in order to improve GN Bank’s financial situation. By that decision, the FSA instructed the BGF, in the context of its function as the bank’s ‘insolvency administrator’, inter alia, to draw up reports, monitor GN Bank’s activities and exercise all the legal powers of an ‘insolvency administrator’.
14. In view of the risk of insolvency of GN Bank, the BGF, acting as resolution authority, adopted a decision on 29 September 2022 to initiate resolution in respect of GN Bank, the write-down of the capital instruments issued by GN Bank and the application of a resolution tool in the form of a bridge institution (‘the decision of 29 September 2022’). The assets set out in that decision were thus transferred to the bridge institution, Bank BGF S.A., on 3 October 2022. The BGF appointed an insolvency administrator within the entity under resolution. The addressees of the decision were GN Bank, Bank BGF and the tinsolvency administrator.
15. The supervisory board of GN Bank brought an action against the decision of 29 September 2022 before the Wojewódzki Sąd Administracyjny w Warszawie (Regional Administrative Court, Warsaw, Poland) (‘the referring court’). Actions were also brought by other entities, including the owners of the written down shares or bonds issued by GN Bank, its creditors and the parties to credit and loan agreements denominated in foreign currency or indexed to a foreign currency. (11)
16. The applicants in the main proceedings seek a declaration that the BGF decision was taken in breach of the law, which would allow them to seek damages through a civil action. The pleas raised are based both on a breach of substantive law and a breach of procedural rules having a significant impact on the outcome of the case. In that regard, it is alleged in particular that the BGF had a conflict of interest, constituting an impediment to performance of the functions of resolution authority, in so far as it performed the functions of supervision, bank deposit guarantee and resolution at the same time. That conflict of interest is, the applicants argue, aggravated by the failure to ensure adequate procedural safeguards as provided for in Directive 2014/59.
17. The BGF contends that there is no conflict of interest. It submits that it has put in place organisational and structural arrangements which serve to create a guarantee of operational independence and avoid conflicts of interest between the performance of the resolution function and the performance of its other functions.
18. The referring court has doubts, in particular as to whether such a conflict of interest exists.
19. First, the referring court questions whether the function of statutory guarantor of bank deposits and the function of bank ‘insolvency administrator’ are ‘functions of supervision’ or ‘other functions’ within the meaning of Article 3(3) of Directive 2014/59, which must not be combined with the resolution function.
20. The referring court considers, on the one hand, that, even though the function of ‘insolvency administrator’ cannot be classified strictly as a supervisory function since that function is performed by the FSA, the ‘insolvency administrator’ is appointed, under Polish law, in a decision taken by that supervisory authority and performs the tasks entrusted to it by that authority. The referring court concludes that it cannot be ruled out a priori that the performance of that function by the BGF did not require that appropriate arrangements be put in place to ensure operational independence and avoid conflicts of interest.
21. On the other hand, according to the referring court, combining the resolution function with that of deposit guarantor, consisting of raising funds to cover the guarantees and disbursing them, could, in the absence of structural separation and organisational independence of those functions, create the risk that the measures adopted by the BGF with regard to the bank at risk of insolvency might be aimed at reducing to a minimum the commitment of the resources available to the BGF.
22. Second, the referring court expresses doubts as to the nature of the requirement for structural guarantees referred to in Article 3(3) of Directive 2014/59 and wishes to know whether it is possible, in the specific circumstances of the case, to hold that operational independence was maintained and that there was no conflict of interest.
23. In particular, the referring court takes the view that that objective must be achieved by ensuring that the staff involved in carrying out the resolution tasks entrusted to the resolution authority have a separate organisational structure and separate reporting lines from the staff involved in supervisory tasks or the staff performing the other functions of the authority concerned. However, in its view, the Law on the bank guarantee fund, deposit guarantee scheme and resolution does not introduce systemic provisions to ensure a structural separation between the resolution function and the other functions of the BGF. It states that the tasks relating to the resolution function, the bank’s ‘insolvency administrator’ function and the deposit guarantor function have been entrusted to separate organisational units within the BGF, but that decisions within the framework of all those functions are adopted by the same persons performing managerial or advisory functions in the BGF.
24. In those circumstances the Wojewódzki Sąd Administracyjny w Warszawie (Regional Administrative Court, Warsaw) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:
‘(1) Is Article 85(2) and (3) of Directive [2014/59], in conjunction with Article 47 of the [Charter], and the second paragraph of Article 19(1) [TEU], to be interpreted as meaning that, when the supervisory board of an entity undergoing restructuring brings an action before a national administrative court against a decision concerning compulsory restructuring, an effective legal remedy is deemed to be available also to persons who, in bringing an action against that decision, seek protection of their legal interest, where the court, in reviewing the contested decision, is not bound by the pleas in law and conclusions of the action or the legal basis relied on, a final judgment, given as a result of hearing that action, is effective erga omnes, and the possibility for those persons obtaining protection of their legal interest is not conditional on them bringing a separate action before an administrative court against that decision?
(2) Is Article 85(3) of Directive [2014/59], which requires effective judicial review, and Article 47 of the [Charter], and the second subparagraph of Article 19(1) [TEU], which provide for effective legal protection, to be interpreted as precluding the application of a procedural rule of a Member State which requires a national administrative court to hear jointly all actions brought before it against a decision of a resolution authority where the application of that rule, together with other national procedural requirements relating to administrative courts, makes it excessively difficult, if not impossible, to give judgment in the case within a reasonable period, in view of the large number of such actions?
(3) Is Article 3(3) of Directive [2014/59 to] be interpreted as permitting a Member State – in order to ensure operational independence and avoid conflicts of interest – not to separate structurally the functions of the resolution authority from the other functions of that authority as statutory guarantor of bank deposits or bank insolvency administrator (temporary administrator) appointed pursuant to a decision of the competent national authority for supervision for the purposes of Regulation [No 575/2013] and Directive [2013/36]?
(4) Is Article 3(3) of Directive [2014/59] to be interpreted as meaning that, where a Member State fails to fulfil its obligation to put in place adequate structural arrangements to ensure operational independence and avoid conflicts of interest between the functions of supervision under Regulation [No 575/2013] and Directive [2013/36] or other functions of the relevant authority and the functions of the resolution authority, the condition relating [to] operational independence and avoidance of conflicts of interest may be deemed to be satisfied if the national administrative court reviewing the decision concerning compulsory restructuring finds that the other administrative arrangements made were sufficient to achieve that effect?
25. BI and TM, SJ and ML, DG and GM, the BGF, Rada Nadzorcza Getin Noble Bank and Others, the Polish Government and the European Commission submitted written observations. Those parties (with the exception of DG and GM), together with OS and NS, and DL and Others, participated in the hearing held on 21 March 2024, at which they replied to questions for oral answer put by the Court.
IV. Analysis
26. At the request of the Court, I shall focus my analysis on the third and fourth questions of the referring court, which concern the question of the conflict of interests within the BGF.
A. The third question referred
27. The referring court asks the Court of Justice whether Article 3(3) of Directive 2014/59 must be interpreted as permitting a Member State – in order to ensure operational independence and avoid conflicts of interest – not to separate structurally the functions of the resolution authority from the other functions of that authority as statutory guarantor of bank deposits or temporary administrator (‘insolvency administrator’) appointed pursuant to a decision of the competent national authority for supervision for the purposes of Regulation No 575/2013 and Directive 2013/36.
28. Article 3(3) of Directive 2014/59 makes it clear that the resolution authority may, exceptionally, be the competent authority for the prudential supervision of credit institutions and investment firms.
29. Article 3(3) specifies that such a combination of functions is only possible subject to a number of conditions. First, adequate structural arrangements must ensure operational independence and avoid conflicts of interest between the two functions (prudential supervision and resolution), without prejudice to the exchange of information and cooperation required for the preparation, planning and application of resolution decisions. (12) Second, that operational independence must be reflected in a separate organisational structure and separate reporting lines for the staff assigned to each of the two functions. Third, the Member States or the resolution authority are to adopt and make public any relevant internal rules including those regarding professional secrecy and information exchanges between the different functional areas.
30. Those conditions, which apply when the resolution authority performs the functions of a prudential supervisory authority, also apply to ‘the other functions of the resolution authority’.
31. Consequently, the question arises as to whether those requirements must be met where, as in the present case, the resolution authority has been appointed as temporary administrator (‘insolvency administrator’) at the early intervention stage provided for in Article 29 of Directive 2014/59, and guarantees bank deposits.
32. To that end, it is appropriate to begin by considering the type of conflict of interest to be avoided.
33. It is true that recital 15 of Directive 2014/59 refers, with a view to ensuring the required speed of action, guaranteeing independence from economic actors and avoiding conflicts of interest, to the appointment of public administrative authorities or authorities entrusted with public administrative powers to perform the functions and tasks in relation to resolution pursuant to that directive. However, that risk of a conflict of interest in relation to the outside world, namely economic operators, does not seem to me to be the risk referred to in Article 3 of that directive, since that risk of a conflict of interest in relation to economic operators, which is akin to a subjective conflict of interests, is limited by the appointment of a public authority rather than a private entity. That concept of ‘subjective conflict of interest’ appears to be used where, in Article 29, the directive provides that there is to be no conflict of interest when the temporary administrator is appointed or when the sale of business resolution tool is implemented, since, in that case, the sale must not be subject to any conflict of interest. (13)
34. In the present case, there is a risk of a downstream conflict of interest, that is to say within the resolution authority itself. The conflict of interest is therefore no longer envisaged as a subjective risk linked to the personal interest of a natural or legal person, but as a functional or objective risk, linked to the performance of more than one function by the same entity, liable to result in distorted decision-making.
35. As regards combining the performance of prudential supervision and resolution functions within the same entity, the EU legislature considered that it was possible on condition that certain organisational requirements, mentioned above, were met. Similarly, it provided that those organisational requirements were to be put in place for the other functions performed by the resolution authority.
36. It may be inferred that the objective of the EU legislature is to protect the decisions of the resolution authority from any influence external to the resolution task entrusted to it, having regard to the economic and legal consequences, in particular for creditors and shareholders, of resolution decisions that may be taken.
37. Consequently, the interpretation of the concept of ‘other functions’ must be broad in order to comply with that objective.
38. Thus, contrary to the analysis proposed by the BGF and the Polish Government, the function of guaranteeing bank deposits must be regarded as an ‘other function’ subject to the requirements for preventing conflicts of interest when carried out by the resolution authority.
39. Although it is true that the deposit guarantee function is intended to ensure financial stability in the same way as the resolution function, (14) and that the funds of the deposit guarantee scheme are intended to be used in the context of a resolution action, (15) it cannot be ruled out that there may be an error in the use of those funds which must be capable of being rectified without risk of a conflict of interest within the resolution authority.
40. Article 75 of Directive 2014/59 provides: ‘Member States shall ensure that if the valuation carried out under Article 74 determines that … the deposit guarantee scheme in accordance with Article 109(1) … has incurred greater losses than it would have incurred in a winding up under normal insolvency proceedings, it is entitled to the payment of the difference from the resolution financing arrangements’. In that situation, the interests of the deposit guarantee scheme and of the resolution authority are in conflict with each other. Therefore, in any event, the criterion proposed by the BGF and the Polish Government to restrict the ‘other functions’ subject to organisational requirements solely to the functions that could conflict with the resolution function is not met.
41. The functions of temporary administrator (‘insolvency administrator’) are carried out by the body appointed by the prudential supervisory authority pursuant to Article 29 of Directive 2014/59. Consequently, the question arises as to whether those functions are the supervisory functions provided for by Regulation No 575/2013 and Directive 2013/36 or whether they fall within the category of ‘other functions’ referred to in Article 3(3) of Directive 2014/59.
42. That article envisages that the resolution functions may be performed by the prudential supervisory authority, in other words that a single authority may carry out both resolution and supervisory functions. Accordingly, in the literal sense, ‘the supervisory functions provided for by Regulation [No 575/2013] and Directive [2013/36]’ correspond to all the supervisory tasks performed by the prudential supervisory authority under those two provisions.
43. The supervisory measures and powers of the prudential supervisory authority are described in Articles 102 to 107 of Directive 2013/36. However, Article 27(1) of Directive 2014/59, which provides for early intervention measures, prior to a possible resolution, states that ‘Member States shall ensure that competent authorities have at their disposal, without prejudice to the measures referred to in Article 104 of Directive [2013/36] where applicable,’ certain measures which it lists.
44. Thus, the early intervention measures are in addition to those entrusted to the prudential supervisory authority by Directive 2013/36.
45. Similarly, the duties that may be assigned to the temporary administrator (‘insolvency administrator’) represent an additional degree of intervention in the management of the institution, since that administrator is appointed either to replace the management body temporarily or to work temporarily with it. (16)
46. Those functions relating to early intervention and temporary administration are therefore specific to Directive 2014/59 and must be classified as ‘other functions’ and not as prudential supervisory functions in the strict sense.
47. In any event, the guarantees of independence and the measures to prevent conflicts of interest are the same for prudential supervisory functions as for other functions.
48. The EU legislature adopted the same reasoning, concerning operational independence and the prevention of conflicts of interest, for the European Central Bank (ECB) which, in addition to its monetary policy tasks, has the task of prudential supervision. Thus, the second subparagraph of Article 25(2) 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 (17) provides that the staff involved in the prudential supervisory function are to be organisationally separated from and subject to separate reporting lines from the staff involved in carrying out other tasks conferred on the ECB. Article 25(3) states that for that purpose the ECB is to adopt and make public any necessary internal rules, including rules regarding professional secrecy and information exchanges between the two functional areas.
49. The practical arrangements for applying those principles are set out in detail in the supervisory manual published in January 2024 by the ECB. For example, the Governing Council’s deliberations on supervisory matters are kept strictly apart from those on monetary issues, with separate agendas and meetings. (18) Supervisory tasks are conferred on six specific directorates general, each of which report functionally to the Chair or Vice-Chair of the Supervisory Board, independent of the Governing Council and responsible for submitting to it draft supervisory decisions. There are shared services (human resources, information systems, communications, budget and organisation, premises, internal audit, legal services and statistics) for all the tasks conferred on the ECB. (19)
50. That type of organisation seems to me to comply with the identical requirements of Directive 2014/59. If it is permissible to combine functions within the same authority, that should not lead to the imposition of a double board of directors or duplicated joint services. On the other hand, it is necessary for the reporting lines to remain separate outside that board of directors, it being noted that the existence of a Supervisory Board alongside the Governing Council within the ECB is a requirement of Regulation No 1024/2013. (20)
51. Those points should be clarified in the forthcoming text on the resolution of insurance and reinsurance undertakings. In the proposal for a Directive of the European Parliament and of the Council establishing a framework for the recovery and resolution of insurance and reinsurance undertakings and amending Directives 2002/47/EC, 2004/25/EC, 2009/138/EC, (EU) 2017/1132 and Regulations (EU) No 1094/2010 and (EU) No 648/2012, (21) including in its latest version, (22) there are similar provisions relating to the designation of competent resolution authorities for insurance undertakings and the existence of other functions performed by such authorities. The concepts used are the same as in Directive 2014/59 and Regulation No 1024/2013, namely adequate structural arrangements to avoid conflicts of interest between the different functions performed, separate reporting lines and operational independence. The following clarifications are also made: the need for separate staff and separate decision-making processes. As the draft currently stands, Article 3(4) states that reporting lines may converge at the highest level of an organisation that subsumes different functions, and that staff may be shared.
52. Those factors may provide useful guidance to the referring court, which will have to assess whether the organisational arrangements chosen to guarantee operational independence and avoid conflicts of interest between the various functions assigned to the BGF allow compliance with the conditions laid down in Article 3(3) of Directive 2014/59.
53. Accordingly, I propose that the answer to the referring court should be that Article 3(3) of Directive 2014/59 must be interpreted as meaning that the requirements for the existence of adequate structural arrangements to ensure operational independence and avoid any conflict of interest between the supervisory functions provided for in Regulation No 575/2013 and Directive 2013/36, or the other functions of the authority concerned, and the functions of resolution authorities pursuant to Directive 2014/59, including a structural separation and separate reporting lines, apply where the resolution authority performs the other functions of temporary administrator pursuant to Article 29 of that directive, and of guarantor of bank deposits.
B. The fourth question referred
54. The fourth question concerns, in essence, whether the absence of adequate structural arrangements made by the Member State to avoid conflicts of interest and to guarantee operational independence may be compensated for by effective organisational solutions and measures adopted by the resolution authority.
55. It will be recalled that the last subparagraph of Article 3(3) of Directive 2014/59 states that ‘the Member States or the resolution authority shall adopt and make public any necessary relevant internal rules including rules regarding professional secrecy and information exchanges between the different functional areas’.
56. It is clear from that article that it is not only for the Member States to adopt and make public the relevant internal rules, but that the resolution authority itself may also do so.
57. Article 3(5) of the proposal for a directive referred to in point 51 of the present Opinion, including in its latest version, (23) states that it is not the Member States but the resolution authorities that are responsible for adopting and making public rules to guarantee operational independence between the different functions performed by the resolution authority and to prevent conflicts of interest.
58. On that point, the BGF produced, as an annex to its observations before the Court, certain regulations issued by its management board, (24) the president of the board (25) and its council. (26) Those acts concern, inter alia, the structural organisation and organisation chart of the Fund Office, the distribution of tasks between the members of the management board and their supervisory powers over the BGF offices under their authority, the ethical principles applicable to the BGF’s employees and the instructions given by the BGF for performing ‘insolvency administrator’ functions.
59. It is therefore for the referring court to ascertain which rules were adopted and made public by the resolution authority. The referring court may usefully examine those provisions in order to assess how the requirements of operational independence and absence of a conflict of interest under Article 3(3) of Directive 2014/59 are implemented within the BGF.
60. As regards the making public of those rules, which is also required by that article, the referring court will have to ascertain whether those rules have actually been made public and, if so, whether the information available on the BGF’s website – in particular the organisation chart and details of the powers of each of the members of the management board and the departments attached to it – can compensate for the failure to make the acts themselves public. It should be noted that Directive 2014/59 does not provide for any penalty for such failure to make the rules public.
61. In any event, in the absence of detailed procedural rules laid down by EU law for giving effect to a right, in accordance with settled case-law of the Court, it is for the national legal system of each Member State to lay down procedural rules to ensure the safeguarding of rights which individuals derive from EU law. Those rules must not, however, be less favourable than those governing similar domestic remedies (principle of equivalence) and must not render practically impossible or excessively difficult the exercise of rights conferred by EU law (principle of effectiveness). (27)
62. In the absence of a national rule transposing Directive 2014/59 penalising failure to make rules public, the referring court will therefore have to apply its domestic law to assess the consequences.
63. In conclusion, I propose that the answer to the referring court should be that Article 3(3) of Directive 2014/59 must be interpreted as meaning that, in the absence of internal rules, adopted and made public by the Member State, capable of ensuring operational independence and avoiding any conflict of interest between the functions of supervision pursuant to Regulation No 575/2013 and Directive 2013/36 or the other functions of the relevant authority and the functions of resolution authorities pursuant to Directive 2014/59, it is for the resolution authority to adopt and make public such rules and for the national court to verify that they are appropriate for securing the objectives referred to in Article 3(3) of Directive 2014/59 or to set out the consequences, under its national law, of a failure to adopt or make public such rules.
V. Conclusion
64. In view of the foregoing considerations, I propose that the Court of Justice should answer the third and fourth questions referred for a preliminary ruling by the Wojewódzki Sąd Administracyjny w Warszawie (Regional Administrative Court, Warsaw, Poland) as follows:
Article 3(3) of 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/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council,
must be interpreted as meaning that
– the requirements for the existence of adequate structural arrangements to ensure operational independence and to avoid any conflict of interest between the functions of supervision pursuant to Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and amending Regulation (EU) No 648/2012, as amended by Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019, and 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, as amended by Directive (EU) 2019/878 of the European Parliament and of the Council of 20 May 2019, or the other functions of the relevant authority, and the functions of resolution authorities pursuant to Directive 2014/59, including a structural separation and separate reporting lines, apply where the resolution authority performs the other functions of temporary administrator pursuant to Article 29 of that directive, and of the guarantor of bank deposits.
– In the absence of internal rules, adopted and made public by the Member State, capable of ensuring operational independence and avoiding any conflict of interest between the functions of supervision pursuant to Regulation No 575/2013 and Directive 2013/36, as amended, or the other functions of the relevant authority, and the functions of resolution authorities pursuant to Directive 2014/59, it is for the resolution authority to adopt and make public such rules and for the national court to verify that they are appropriate for securing the objectives referred to in Article 3(3) of Directive 2014/59 or to set out the consequences, under its national law, of a failure to adopt or make public such rules.