EU Judgment in Case C-389/21 P ECB v Crédit Lyonnais

Thursday 4th May 2023

Judgment in Case C-389/21 P ECB v Crédit Lyonnais

(Economic Policy)

Crédit Lyonnais is a public limited company incorporated under French law and authorised as a credit institution. This credit institution is a subsidiary of Crédit Agricole SA and, as such, is subject to direct prudential supervision by the European Central Bank (ECB ).

On 5 May 2015, Crédit Agricole, on its own behalf and on behalf of the entities of the Crédit Agricole group, including Crédit Lyonnais, requested the ECB’s authorisation to exclude from the calculation of the leverage ratio the exposures to Caisse des Dépôts et Consignations (CDC), a French public institution, resulting from deposits made in several savings books, which, according to the applicable French regulations, must be compulsorily transferred to CDC.

The decision of 24 August 2016, by which the ECB had refused to grant Crédit Agricole the requested authorisation, was annulled by a judgment of the General Court.

Following this judgment, Crédit Agricole reintroduced its request to the ECB for permission to exclude exposures to CDC. By decision of 3 May 2019, the ECB authorised Crédit Agricole and the entities forming part of the Crédit Agricole group, with the exception of Crédit Lyonnais, to exclude from the calculation of the leverage ratio all their exposures to CDC. Crédit Lyonnais, on the other hand, was only allowed to exclude 66%. In the contested decision, the ECB applied a methodology which took into account three elements, namely, the credit quality of the French central government, the risk of a distressed sale and the level of concentration of exposures to CDC.

Crédit Lyonnais’ application for annulment of the contested decision insofar as it refused to authorise Crédit Lyonnais to exclude from the calculation of its leverage ratio all of its exposure to CDC was upheld by the General Court.

Specifically, the General Court found that the reason for the contested decision based on the level of risk of distressed sales was vitiated by “illegality”. Consequently, the other two elements of the methodology applied by the ECB could not have led to the ECB refusing, in the contested decision, to grant Crédit Lyonnais the benefit of the exclusion for all of that institution’s exposure to CDC.

The ECB appealed the General Court judgment.

Background Documents C-389/21 P