EU: General Court rules Italian bank rescue legal

European Union judges ruled on Tuesday, March 19, that Italy’s rescue plan for an ailing bank five years ago was legal, prompting calls for compensation for savers who subsequently faced stricter terms because Brussels had rigidly interpreted the bloc’s rules.

In a blow to EU antitrust regulators, the General Court annulled a European Commission decision that rejected the Italian plan for Tercas and forced Rome to recoup financial aid to the bank.

After the dispute with Brussels over the rescue of Tercas, Italian authorities intervened to help four other small banks in 2015 and then saved larger Banca Monte dei Paschi di Siena and two smaller north-eastern Italian banks in 2017.

Those rescues were conducted under less favorable terms for the banks and their creditors, because of the EU’s rejection of the Tercas plan, the Italian banking association (ABI) said in a statement, urging the Commission to reimburse lenders and savers who lost money “due to the consequences of its wrong decisions.”

The rescue of Tercas, which was sold to Banca Popolare di Bari as part of the plan, was orchestrated by Italy’s deposit guarantee fund, the Fondo Interbancario di Tutela dei Depositi (FITD), a private entity fund.

The Commission said that the FITD illegally acted on behalf of the Italian state and ordered it to recoup €300 million (US$340 million) of grants and guarantees it deemed as State aid.

But the General Court dismissed this reasoning.

“The FITD acted independently when it adopted the measures for the benefit of Tercas,” it said in a statement.

A Commission spokesman stated that the EU executive “will carefully study the judgment and reflect on possible next steps.”

Banca Popolare di Bari stated it would consider possible legal action against the Commission and potential claim for compensation.