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French banks won a judicial victory against at the European Central Bank (ECB) on Friday, which exempts them from establishing reserves of own funds for savings collected through Livret A and sustainable development (LDD).
The Court of Justice of the European Union annulled a decision of the ECB requiring the six French banks concerned to reserve their own funds for the savings they collected through Livret A or LDD and they then transferred to the Caisse des dépôts (CDC). This is the first major victory for banks in a case against the ECB since the central bank became the main supervisory body for the banking sector in 2014. "The ECB erred in law and made mistakes manifestos of badysis, "said the European Court. This decision will reduce the capital requirements of six French banks (BNP Paribas, Societe Generale, Credit Agricole, BPCE, Crédit Mutuel and Banque postale).
Banks regularly contest the decisions of the ECB
The total outstanding amount of the Booklet A and the Sustainable Development Booklet (LDD), all windows combined, reached 386 billion euros at the end of May. Banks can invest 60% of this savings with the CDC, which uses these funds to invest in social housing and other projects. La Banque Postale and BPCE, which have long had a monopoly on regulated savings in France, should be the main beneficiaries of this decision. For La Poste's banking subsidiary, the ECB's decision on regulated savings that came into effect in early 2018 had lowered its leverage ratio from 5.3% to 4.5%. The ECB faces numerous recourse from banks, which regularly challenge its decisions.
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