The European Court of Justice (EuGH) ultimately dismissed the damages action brought by two shareholders concerning the European Central Bank’s supervision of Banca Carige (EuGH, judgment of 21 May 2026 – C-557/24). Although the Court partially set aside the judgment at first instance because the General Court had incorrectly assessed the protective effect of certain supervisory provisions and had failed to examine certain arguments, the EuGH did not find a sufficiently serious breach by the ECB that could have established non-contractual liability.
Damages arising from the banking supervision of Banca Carige
Banca Carige was a listed Italian credit institution and had been subject to the ECB’s direct supervision since 2014. The appellants held shares in the bank.
The shareholders sought compensation for losses that, in their view, had been caused by unlawful conduct on the part of the ECB in its supervision of Banca Carige between 2014 and 2019. The amounts claimed were EUR 870,525,670 for the company involved and EUR 9,544,022 for the shareholder involved. In the alternative, the General Court was asked to determine a higher or lower appropriate amount.
The Gericht der Europäischen Union (General Court of the European Union) had dismissed the action by judgment of 5 June 2024. The appeal to the EuGH was directed against that judgment.
Development of the bank’s capital position
Capital measures and early intervention
In April 2015, Banca Carige’s general meeting resolved to increase the bank’s capital by EUR 850 million. The purpose was to close a capital shortfall identified by the ECB in its 2014 comprehensive assessment.
On 9 December 2016, the ECB adopted an early intervention measure. Banca Carige was subsequently required to submit, by 28 February 2017, a strategic plan and an operational plan for reducing non-performing loans. These plans were to specify the proposed measures and the respective time frame.
In September 2017, the board of directors adopted a recapitalisation plan. Among other measures, it included a capital increase that was ultimately carried out in December 2017 in the amount of EUR 544 million.
Further own funds requirements
At the end of 2017, the ECB established the supervisory requirements applicable to Banca Carige for 2018. The bank’s subsequent attempts to increase its own funds were unsuccessful. At the same time, differing views emerged within the board of directors as to how the requirements should be met and the recapitalisation plan implemented.
By decision of 14 September 2018, the ECB declined to approve the capital conservation plan prepared by Banca Carige. The bank was required to submit a new plan approved by its board of directors by 30 November 2018 at the latest. That plan was to be aimed at restoring compliance with the own funds requirements by 31 December 2018 and ensuring continued compliance thereafter.
The plan subsequently developed provided for two steps:
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First, subordinated Tier 2 bonds were to be issued.
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This was to be followed by a capital increase subject to shareholder approval.
Bonds totalling EUR 320 million were subscribed. However, the general meeting did not approve the proposed capital increase in December 2018. Shareholders holding 70% of the capital voted against it because they wanted to review the bank’s business plan and its 2018 financial statements before making a decision.
Temporary administration by the ECB
Following several resignations from the board of directors, the ECB decided on 1 January 2019 to place Banca Carige under temporary administration. The existing board of directors and supervisory board were dissolved and replaced by temporarily appointed governing bodies. They were tasked with taking the measures necessary to enable the bank to restore and maintain compliance with the own funds requirements.
The measure was extended three times during 2019. The objective was to stabilise the bank’s situation and complete the increase in its own funds.
In August 2019, Banca Carige, an Italian banking group and two deposit guarantee funds agreed on the key elements of a business plan. In particular, it provided for a capital increase of EUR 700 million and new subordinated Tier 2 bonds. In September 2019, the ECB found that the proposed capital increase did not conflict with sound and prudent management.
The general meeting approved the capital increase on 20 September 2019. The appellant company did not attend that meeting. Following completion of the capital measure, a new board of directors and a new supervisory board were elected in January 2020, bringing the temporary administration to an end.
Requirements for non-contractual liability
The liability of the European Union or one of its institutions for damages is subject to three cumulative requirements:
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The institution concerned must have acted unlawfully.
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Actual damage must have occurred.
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There must be a causal link between the unlawful conduct and the damage.
As regards the first requirement, not every infringement of the law is sufficient. As a general rule, there must be a sufficiently serious breach of a rule of law intended to confer rights on individuals.
The General Court had dismissed the action after finding that the first requirement had not been met. It therefore examined neither the remaining requirements for liability nor the claimants’ applications for evidence to be taken.
Allegations raised in the proceedings at first instance
The shareholders based their action on eight groups of allegations. Among other things, they accused the ECB of:
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failing to correct allegedly misleading statements made by members of the bank’s governing bodies concerning its financial soundness,
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exerting undue influence on the board of directors,
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approving a capital increase despite an alleged infringement of the pre-emption right provided for in the articles of association,
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appointing temporary administrators despite an alleged conflict of interest,
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adopting the early intervention measure in breach of various provisions and principles,
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setting disproportionately short deadlines in the own funds decision,
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frustrating the shareholders’ legitimate expectations, and
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causing a substantial decline in the value of their shareholdings through acts and omissions.
The General Court considered that none of these matters was capable of establishing the ECB’s non-contractual liability. In some instances, it found that there was no rule of law conferring corresponding individual rights on the claimants. It rejected other pleas due to a lack of evidence, insufficient substantiation or inadmissibility.
EuGH identifies errors of law by the General Court
Supervisory provision may confer rights on shareholders
The EuGH criticised the General Court’s assessment of Art. 69octiesdecies(1)(a) of the Italian Banking Act. That provision permits early intervention measures where the situation of a credit institution is rapidly deteriorating and an infringement of certain supervisory requirements has been identified or is expected.
According to the Court, such measures may affect the legal position of the credit institution and its shareholders. This applies in particular where the institution’s decisions are influenced or distributions to shareholders are prevented. The bank and its shareholders may therefore require an early intervention measure to be adopted only where the statutory conditions are met.
The General Court had therefore erred in law in finding that the provision pursued exclusively a public interest and did not confer any rights on individuals. The appeal succeeded on this point.
Objections to the own funds decision left unexamined
The EuGH also found that the General Court had failed to state adequate reasons. The General Court had not ruled on all the objections by which the claimants challenged the lawfulness of the own funds decision of 14 September 2018.
In particular, it had not examined the allegations that the ECB shared responsibility for Banca Carige’s situation and that the reasoning underlying the own funds decision contained further errors. The EuGH also partially set aside the judgment at first instance in this respect.
No sufficiently serious breach by the ECB
Despite the errors identified in the General Court’s judgment, the damages action remained unsuccessful. The EuGH considered that the state of the proceedings permitted final judgment on the points concerned and examined the objections itself.
Conditions for early intervention had been examined
In the EuGH’s view, the early intervention measure showed that the ECB had taken into account the development of the capital ratios, insufficient profitability, the credit risk arising from non-performing loans and the uncertainties associated with the strategic plan. It had concluded that Banca Carige was likely to breach the applicable own funds requirements in the near future.
The ECB had therefore not confined itself to identifying a merely abstract risk. Accordingly, there was no sufficiently serious breach of Art. 69octiesdecies(1)(a) of the Italian Banking Act.
No obligation to sell non-performing loans
The EuGH also confirmed that the early intervention measure did not require Banca Carige to sell non-performing loans. The bank was required to develop a plan containing quantitative targets for reducing them. However, it remained free to choose the means used to achieve those targets.
There was therefore no contradiction between the requirement to set reduction targets and the finding that the ECB had ordered neither a sale nor specific sale prices.
Objections to the own funds decision are unsuccessful
The further objections to the own funds decision likewise did not give rise to liability. Even if the ECB had failed to take account of certain results of its review of Banca Carige’s receivables, the EuGH held that this would not have rendered the decision unlawful. The claimants themselves had argued that those results would have shown an even greater need for additional capital.
The own funds decision did not prescribe a specific amount for the bank. Instead, it required a plan approved by the board of directors to restore and maintain compliance with the own funds requirements. Responsibility for determining the specific amount required and selecting the measures necessary to achieve it lay with the board of directors.
Nor would any possible shared responsibility on the part of the ECB for the bank’s financial situation have prevented the supervisory authority from taking measures to remedy a capital shortfall. The EuGH expressly left open whether the corresponding allegations were correct.
No protected expectation of lasting stability
The Court confirmed the strict requirements governing the protection of legitimate expectations under EU law. Clear, unconditional and consistent assurances originating from authorised and reliable sources are required.
Supervisory measures taken by the ECB or the approval of individual capital measures are not sufficient in themselves. In particular, they do not create a legitimate expectation that a credit institution will remain financially stable in the long term or that no further supervisory measures will be required in the future.
Nor did the failure to correct statements that shareholders considered misleading amount to such an assurance. In the EuGH’s view, mere inaction did not satisfy the requirements for a legitimate expectation deserving protection.
Further grounds for liability remain unsuccessful
No unequal treatment established
The shareholders had argued that Banca Carige had been disadvantaged compared with other Italian credit institutions. However, the comparison submitted concerning the volume of non-performing loans was insufficient. There was no link between the respective situations of the banks and the specific decisions taken by the ECB.
The EuGH also confirmed that, as a general rule, a party must prove the facts on which it relies. Among other things, the application for an expert opinion lacked sufficient prima facie evidence of unjustified unequal treatment.
No conflict of interest established
The appointment of former members of the board of directors as temporary administrators did not in itself give rise to a conflict of interest. This would have required specific circumstances indicating a realistic prospect of liability proceedings arising from their previous activities.
According to the EuGH, previous work for a credit institution cannot generally be regarded as incompatible with a subsequent appointment as a temporary administrator. The existing knowledge of the institution may be particularly relevant to the performance of that role.
Review of the amendment to the articles of association was limited
Under Art. 56 of the Italian Banking Act, the ECB was required to assess whether the amendment to the articles of association was contrary to sound and prudent management. That assessment did not extend generally to compliance with all of the shareholders’ rights under company law.
The EuGH also found that the pre-emption right under Art. 72(4) of Directive (EU) 2017/1132 may be restricted or excluded by a resolution of the general meeting. In the case of Banca Carige, the capital increase had been approved by the general meeting.
Right to property and decline in share value
The protection of property under Art. 17(1) of the Charter of Fundamental Rights of the European Union confers rights on individuals. However, the claimants had not sufficiently demonstrated that the ECB’s measures had caused the alleged decline in the value of their shares.
The capital increase excluding the pre-emption right had been approved not by the temporary administrators but by the general meeting. The claimants would therefore have had to explain how the ECB’s conduct had induced the shareholders present to grant their approval, even though they could also have rejected the proposal.
Partial setting aside does not change the final outcome
The EuGH set aside the General Court’s judgment on two limited points: the classification of the early intervention provision as not being intended to protect individuals and the failure to examine the objections to the own funds decision. It dismissed the appeal as to the remainder.
Following its own examination, the Court also dismissed as unfounded the parts of the action affected by the partial setting aside. The damages action therefore remained entirely unsuccessful.
Significance for liability in banking supervision
The decision makes clear that provisions governing early supervisory intervention measures do not necessarily serve exclusively public purposes. To the extent that they limit the conditions under which the legal position of a credit institution and its shareholders may be interfered with, they may confer rights on individuals.
However, this individual protective purpose is not sufficient to establish a claim for damages. A sufficiently serious breach must also be established. That requirement was not met in the Banca Carige case because the ECB had assessed the expected breach of the own funds requirements by reference to the bank’s specific financial and supervisory situation.
Companies, investors and shareholders with questions concerning the scope of European banking supervision or potential claims in connection with supervisory measures may contact MTR Legal. Further information is available under legal advice on banking law.
