22nd Mar 2018

States can force bank recapitalisation, EU court says

  • (Photo:

An EU state can take shares in a bank against shareholders' consent when the country's and the EU's financial stability is at stake, the European Court of Justice ruled on Tuesday (8 November).

The court ruled in favour of the Irish government, which in 2011 recapitalised the Irish Life and Permanent Group (ILPG) bank by pumping in €2.7 billion, thus taking a 99.2 percent share in the bank.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

The government later injected another €1.3 billion in the bank.

The government acted through a direction order obtained in court to bypass the opposition of ILPG's shareholders, who later took the case to the Irish High Court and then to the ECJ.

"The direction order was the only means of ensuring the recapitalisation of ILP that was necessary to prevent the failure of that financial institution and thereby to forestall a serious threat to the financial stability of the EU," the judges argued.

At the time of the near takeover of ILPG by the Irish state, Ireland was under an €85-billion international bailout plan launched in December 2010 to prevent the collapse of the banking system.

Although there was a "clear public interest in ensuring a strong and consistent protection of shareholders and creditors," the judges said, "that interest cannot be held to prevail in all circumstances over the public interest in ensuring the stability of the financial system established by the EU treaties".


Deutsche Bank crisis tests EU regulation

EU finance ministers insist that the bank's losses are not a systemic threat, but they revive the debate about the safeguards put in place after the financial crisis.

Merkel in Paris for eurozone reform talks

Angela Merkel - who started her fourth term as Germany's chancellor earlier this week - is wasting no time on big issues like eurozone reforms. On Friday she is meeting Emmanuel Macron where the two will seek common ground.

EU insists on US tariffs exemption

Europe is "an ally, not a threat", the EU Commission says - as the US is poised to impose duties in steel and aluminium. Common action on Chinese steel overcapacity could help diffuse the crisis.

VW dismisses complaints on Dieselgate fix

'I think customers who want to get information (...) are able to receive information if they want," VW management board member Hiltrud Werner told EUobserver. Consumer groups disagree.

News in Brief

  1. EU to have 'immediate' trade talks with Trump
  2. Separatist activist renounces Catalonia leadership candidacy
  3. EU puts conditions on Bayer-Monsanto merger
  4. Hard Brexit would hit poorer Irish households hardest
  5. Finland hosts secretive North Korean talks
  6. EU to unveil 3% tax on digital giants
  7. German elected S&D leader in European Parliament
  8. Germany: nearly €350m child benefit goes abroad

Stakeholders' Highlights

  1. EUobserverStart a Career in EU Media. Apply Now to Become Our Next Sales Associate
  2. EUobserverHiring - Finance Officer With Accounting Degree or Experience - Apply Now!
  3. ECR GroupAn Opportunity to Help Shape a Better Future for Europe
  4. Counter BalanceControversial Turkish Azerbaijani Gas Pipeline Gets Major EU Loan
  5. World VisionSyria’s Children ‘At Risk of Never Fully Recovering', New Study Finds
  6. Macedonian Human Rights MovementMeets with US Congress Member to Denounce Anti-Macedonian Name Negotiations
  7. Martens CentreEuropean Defence Union: Time to Aim High?
  8. UNESDAWatch UNESDA’s President Toast Its 60th Anniversary Year
  9. AJC Transatlantic InstituteAJC Condemns MEP Ana Gomes’s Anti-Semitic Remark, Calls for Disciplinary Action
  10. EPSUEU Commissioners Deny 9.8 Million Workers Legal Minimum Standards on Information Rights
  11. ACCAAppropriate Risk Management is Crucial for Effective Strategic Leadership
  12. EPSUWill the Circular Economy be an Economy With no Workers?

Latest News

  1. EU leaders set for 'stormy debate' on digital tax at summit
  2. EU praises Turkey on migrant deal despite Greek misery
  3. Judicial reforms 'restore balance', Poland tells EU
  4. Whistleblower fears for life as US arrests Malta bank chair
  5. Behind the scenes at Monday's EU talks on Russia
  6. US yet to push on Nord Stream 2 sanctions
  7. EU mulls coercion to get refugee kids' fingerprints
  8. Five east European states prevent new CAP consensus