The ‘White Knight’ Returns (?): Tercas and the role of DGS in managing banking crises

In the aftermath of the global financial crisis, the European legislator has “miraculously" created the Banking Union, re-shaping banking supervision and resolution at the Eurozone level. In this context, Deposit Guarantee Schemes (‘DGS’) were asked to exercise a new role in managing banking crises and were provided by Directive 2014/49/EU (‘DGSD’) with new powers to ease the effects of banks’ liquidation and to prevent them from failing. According to Article 11.3 of the Directive, ‘Member States may allow a DGS to use the available financial means for alternative measures in order to prevent the failure of a credit institution’, given that some specific conditions are met. Notwithstanding the explicit conferral made by the DGSD, the use of DGS has been strongly limited in recent years, because of the denial opposed in 2015 by the European Commission (‘EC’) to the intervention of the Italian Fondo Interbancario di Tutela dei Depositi (‘FITD’) in favor of Cassa di Risparmio di Teramo (‘Tercas’), which was considered as State aid, incompatible with the internal market. After many years of uncertainty, on 19 March 2019 the General Court finally annulled the Commission’s decision, rendering a judgment which is certainly relevant from many perspectives.