When and how is the banker’s liability incurred?
One of the essential functions of the banker is to grant credit to his client. However, credit is a source of responsibility for the person who grants it. The failure to perform one of his duties will be likely to engage his liability, which is mainly subject to common law, both contractual with respect to his clients and tortious with respect to third parties. This is the case, for example
professional secrecy (article 226-13 et seq. of the Penal Code) covering only confidential information
the duty to advise;
the respect of the duty to inform, notably pre-contractual, on the content of the service he proposes to his client;
his duty to warn, by virtue of which he must alert the uninformed future contractor to the content and consequences of his contract. He is only obliged to do so in the event of a risk of excessive indebtedness. The burden of proof that the warning has been carried out is then on the bank. The limitation period for the damage consisting of the loss of opportunity not to contract, runs from the granting of the credit;
the bank’s duty to perform the contract, implying the performance of agreements in good faith;
Similarly, because of the strong intuitu personae that exists in credit transactions, a banker is never obliged to grant his client the credit requested, without having to justify it. However, if his decision is based on discrimination, he may be held liable for failure to comply with the public policy provisions of the Penal Code.
Two situations specific to the banker are particularly likely to engage his liability:
in the case of disputed credit that is at fault and has a causal link with the damage caused ;
in the event of fraud, characterized interference in the management of the debtor or disproportionate guarantees as provided for in article L 650-1 of the Commercial Code.
Thus, granting credit to a borrower in a desperate situation will be considered as fraud, the lack of discernment in the distribution of credit being considered as an unfair act.
Similarly, by virtue of his duty of non-interference, the banker does not have to interfere in the management and the study of the solvency of his client to assess the appropriateness (Article L 761-2 paragraph 2 of the Consumer Code), except possibly in the context of the fight against indebtedness. The banker may be held liable and ordered to bear all or part of the insufficiency of assets (article L.653-1 and following of the Commercial Code).
The banker also has a duty of care, before and during the business relationship, regarding the transactions carried out. In addition to a general obligation of prudence obliging him to refuse to lend his support to an obviously illicit operation, this duty induces for the banker an obligation to report any suspicion, within the framework of the fight against money laundering and terrorist financing (article 561-1 and following of the Monetary and Financial Code).
For all these situations, the banker may be held liable for “damages suffered as a result of the assistance granted”. The banker will be subject to the rules of ordinary liability law and will have to pay damages for the aggravation of the insufficiency of assets resulting from its fault in granting the loans, and its guarantees will be considered void.
