Background
PNB Banka AS, a Latvian credit institution, appealed the General Court’s judgment of 15 November 2023 in PNB Banka and Others v SRB (T-732/19, EU:T:2023:721). That judgment dismissed an action to annul SRB Decision SRB/EES/2019/131 of 15 August 2019 not to adopt a resolution scheme for PNB Banka. The action had been brought by PNB Banka and some of its shareholders and potential shareholders. The General Court held that the shareholders and potential shareholders lacked standing, but that PNB Banka had standing and a legal interest in bringing proceedings; it then rejected all of the bank’s substantive pleas.
The dispute followed intensified supervision during 2019. The ECB inspected PNB Banka, classified it as a significant entity subject to direct prudential supervision, opposed its proposed acquisition of qualifying holdings in another Latvian bank, and adopted early intervention measures. An independent valuation reported that PNB Banka’s assets were less than its liabilities as at 31 March 2019, while the final inspection report identified nine capital-related risk factors, six of very high impact. On 15 August 2019, the ECB found the bank failing or likely to fail under Article 18(1)(a) of Regulation (EU) No 806/2014. The SRB simultaneously decided not to place it under resolution. Latvian insolvency proceedings followed, and the ECB withdrew the bank’s authorisation effective 18 February 2020.
The appeal was lodged on 29 January 2024. Proceedings were stayed pending ABLV Bank v SRB (C-602/22 P, EU:C:2025:953), delivered on 11 December 2025, and then resumed. The Eighth Chamber comprised N. Fenger, President and Rapporteur, S. Rodin and O. Spineanu-Matei; D. Spielmann was Advocate General and V. Di Bucci Registrar. After hearing the Advocate General, the Court proceeded to judgment without an Opinion.
The Court’s Holding
The Court dismissed the appeal in its entirety and ordered PNB Banka to bear its own costs and pay those incurred by the SRB and ECB. It first rejected the SRB’s objection that the appeal rested on an improperly issued power of attorney. The lawyer had produced before the General Court a power issued by PNB Banka’s board before the insolvency administrator’s appointment. That power was capable of covering an appeal, the board was then authorised under Latvian law to issue it, and the insolvency administrator had not subsequently challenged its validity.
The first ground, concerning effective representation and the General Court’s refusal to hold an oral hearing, was inadmissible. PNB Banka did not explain how the General Court’s requirements contravened Article 106 of that court’s Rules of Procedure or another EU-law provision, and its general complaints about representation and Latvian insolvency law did not identify procedural errors justifying setting aside the judgment. The second ground, alleging inadequate reasoning about the decision’s legal effects and PNB Banka’s interest in suing, was partly ineffective and partly inadmissible. Any reasoning defect concerning the bank’s legal interest could not undermine the operative dismissal of its action, while the remaining criticism was insufficiently precise.
On the third ground, the Court identified an error of law but rejected the ground as ineffective. A decision not to adopt a resolution scheme adversely affects the bank, so Article 41(2)(a) of the Charter entitled PNB Banka to be heard beforehand. The General Court had relied on exchanges occurring in distinct ECB prudential-supervision procedures and had not found that PNB Banka was heard in the Article 18 resolution procedure or on its outcome. It therefore erred in concluding that the right to be heard had been respected. Nevertheless, annulment requires a concrete possibility that the procedure could have produced a different outcome without the infringement. PNB Banka had neither argued nor shown that possibility before either court. Substitution of grounds therefore preserved the operative judgment, and the other alleged errors were ineffective.
The fourth ground was unfounded in part and inadmissible in part. The ECB’s significant-entity classification was presumed lawful and effective while annulment proceedings remained pending; that pendency did not require the General Court to exercise its discretion to stay the case. Following ABLV Bank, Article 18 empowers the SRB to decide not to adopt a resolution scheme when it considers the Article 18(1) conditions unmet. Paragraph 83 of Commission v SRB (C-551/22 P, EU:C:2024:520) concerns independent legal effects of resolution schemes and does not establish a general absence of SRB power to adopt acts with independent effects.
Key Takeaways
- The appeal was dismissed, leaving the General Court’s rejection of PNB Banka’s annulment action intact.
- The SRB may decide under Article 18 not to adopt a resolution scheme when the statutory conditions are not met.
- Such a decision adversely affects the bank and triggers a prior right to be heard, but the General Court’s contrary conclusion did not change the result here.
- A party alleging infringement of that right must concretely show that a different procedural outcome is not entirely excluded.
Why It Matters
The judgment confirms the SRB’s authority to close the Article 18 process without a resolution scheme while making clear that the affected bank must be heard. It also demonstrates that establishing a hearing defect is not enough: without a concrete showing of a possible different outcome, the defect will not secure annulment or setting aside of the judgment.
For appellate litigants, the decision equally stresses disciplined pleading. Grounds must identify contested passages and precise legal errors; general complaints about representation, reasoning or legal effects risk inadmissibility. Challenges to reasoning that cannot affect the operative part may instead fail as ineffective.