EU Court of Justice confirms that ECB can keep confidential documents about BES

In the judgment, the Court dismisses the appeal of the Luxembourg company Espírito Santo Financial Group (one of the entities through which GES ensured control of BES) that requested the annulment of the ECB's decision of 31 August 2016, which refused partially access to certain documents related to BES decisions taken at supervisor meetings.

Reuters

The Court of Justice of the European Union confirmed, in a judgment handed down today, that the European Central Bank (ECB) may prohibit access to certain internal documents that were the basis for the liquidation of Banco Espírito Santo (BES).

In the judgment, the Court dismisses the appeal of the Luxembourg company Espírito Santo Financial Group (one of the entities through which the Espírito Santo Group controlled BES) that requested the annulment of the ECB's decision of 31 August 2016, which partially refused access to certain documents related to BES decisions taken at supervisor meetings held on July 28, 2014 and August 1, 2014.

The Court of Justice thus annuls the judgment of 13 March 2019 of the General Court of the European Union, which had annulled the ECB's decision not to grant Espírito Santo Financial Group (ESF) access to certain extracts from the minutes and decisions taken at these meetings.

These minutes refer to supervisor meetings that limited the amount of credit granted to BES, its branches and subsidiaries through Eurosystem credit operations (on 28 July 2014) to a certain maximum level and ended on 01 July August 2014, for completely suspending the access of BES and its branches to monetary policy credit instruments for prudential reasons, ordering the bank to return all the credit granted under the Eurosystem.

The process dates back to April 2016, when Espírito Santo Financial Group requested access to the Governing Council's decision of August 01, 2014, as well as any other decision or document issued by the ECB's bodies, before or after that decision and communications with Banco de Portugal.

In response, the ECB would grant access, in whole or in part, to some of the requested documents, namely, partial access to the extracts from the minutes which recorded the decisions of 28 July and 01 August 2014, as well as to the proposals presented in those meetings.

Dissatisfied with this decision, the ESF again claimed access to the amounts that had been omitted in the extracts of the minutes (namely the amount of the credit in question and the maximum level of emergency liquidity that could be granted by Banco de Portugal to BES ), as well as certain information that was hidden in the proposals of 28 July and 01 August 2014 (namely data related to BES's solvency, the estimate of its indirect exposure, the guarantee granted by the Republic of Angola to Banco Espírito Santo Angola and financial stability issues).

Still requested by the ESF was access to information regarding the creation of Novo Banco.

The ECB would, however, confirm the refusal to grant access to this information, and Espírito Santo Financial Group appealed this decision to the EU General Court, which would annul it in a judgment of 13 March 2019.

The ECB has appealed this decision by the General Court, which has now been set aside by the judgment of the Court of Justice, released today.

The Court of Justice considers, in essence, that the General Court erred in finding that the ECB had not motivated its decision to refuse Espírito Santo Financial Group access to the required information.

This is because, according to the ECB's statutes, the content of the debates is confidential and, if the Governing Council can decide to make the result of its deliberations public, it is an absolute discretionary power.

The Court also recalls that, as it had already ruled in its judgment of 19 December 2019 - in a similar case, but which opposed the ECB to Espírito Santo Financial (Portugal) - the confidentiality of the outcome of the Governing Council's deliberations is thus protected, and it is not necessary that the refusal of access to the documents containing this result is subject to the condition that its disclosure undermines the protection of the public interest.

The Court also points out that the reasoning presented by the ECB allowed Espírito Santo Financial Group to understand that the supervisor relied on the confidentiality enjoyed by the result of the deliberations to refuse access to the amount of the credit in question and that it was a document that reflected that result.

Since the appeal is well founded and the dispute is in a position to be heard, the Court of Justice can decide definitively.

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