Corte di giustizia UE n. 1024/2026

[OSCURATO:PERSONA] ([OSCURATO:PERSONA]) 29 January 2026 ( * ) ( Appeal – Economic and monetary policy – Prudential supervision of credit institutions – [OSCURATO:PERSONA] supervisory mechanism – [OSCURATO:PERSONA] (EU) No 1024/2013 – Specific supervisory tasks conferred on the [OSCURATO:PERSONA] (ECB) – [OSCURATO:PERSONA] 4 – Setting of prudential requirements – [OSCURATO:PERSONA] 16 – Risk linked to irrevocable payment commitments (IPCs) given in favour of deposit guarantee schemes or resolution funds – Deduction in full from the [OSCURATO:PERSONA] 1 capital of the sums paid as collateral for the IPCs – Discretion of the ECB – Judicial review ) [OSCURATO:PERSONA] C‑556/24 P, APPEAL under [OSCURATO:PERSONA] 56 of the Statute of the [OSCURATO:PERSONA] of Justice of the [OSCURATO:PERSONA], brought on 15 August 2024, [OSCURATO:PERSONA] AG, established in Frankfurt am Main (Germany), BHW Bausparkasse AG, established in Hamelin (Germany), represented by H. Berger, D. Schoo and M. Weber, Rechtsanwälte, appellants, the other parties to the proceedings being: norisbank GmbH, established in Bonn (Germany), represented by H. Berger and M. Weber, Rechtsanwälte, applicant at first instance, [OSCURATO:PERSONA] (ECB), represented by F. Bonnard, K. Lackhoff and M. Prokop, acting as Agents, defendant at first instance, [OSCURATO:PERSONA] ([OSCURATO:PERSONA]), composed of M. [OSCURATO:PERSONA] (Rapporteur), [OSCURATO:PERSONA] of the [OSCURATO:PERSONA], N. [OSCURATO:PERSONA] and R. [OSCURATO:PERSONA], [OSCURATO:PERSONA], [OSCURATO:PERSONA]: N. [OSCURATO:PERSONA], [OSCURATO:PERSONA]: A. [OSCURATO:PERSONA], having regard to the written procedure, having decided, after hearing the [OSCURATO:PERSONA], to proceed to judgment without an Opinion, gives the following [OSCURATO:PERSONA] 1 By their appeal, the appellants seek the partial annulment of the judgment of the [OSCURATO:PERSONA] of the [OSCURATO:PERSONA] of 5 June 2024, [OSCURATO:PERSONA] and Others v ECB (T‑182/22, ‘the judgment under appeal’, EU:T:2024:352), by which the [OSCURATO:PERSONA] dismissed their action seeking the partial annulment of [OSCURATO:PERSONA] ECB-SSM-2022-DEDEB-44 of the [OSCURATO:PERSONA] (ECB) of 21 December 2022 (‘the decision of 21 December 2022’), including Annexes I and II thereto, in that that decision lays down the measures to be taken in respect of the irrevocable payment commitments (IPCs) concerning the deposit guarantee schemes (DGSs) or resolution funds. Legal context [OSCURATO:PERSONA] (EU) No 5 75/2013 2 [OSCURATO:PERSONA] 26 of [OSCURATO:PERSONA] (EU) No 575/2013 of the [OSCURATO:PERSONA] and of the [OSCURATO:PERSONA] of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending [OSCURATO:PERSONA] (EU) No 648/2012 (OJ 2013 L 176, p. 1), as amended by [OSCURATO:PERSONA] (EU) 2019/876 of the [OSCURATO:PERSONA] and of the [OSCURATO:PERSONA] of 20 May 2019 (OJ 2019 L 150, p. 1) (‘[OSCURATO:PERSONA] 575/2013’), entitled ‘[OSCURATO:PERSONA] 1 items’, provides, in paragraphs 1 and 2: ‘1.      [OSCURATO:PERSONA] 1 items of institutions consist of the following: (a)      capital instruments, provided that the conditions laid down in [OSCURATO:PERSONA] 28 or, where applicable, [OSCURATO:PERSONA] 29 are met; (b)      share premium accounts related to the instruments referred to in point (a); (c)      retained earnings; (d)      accumulated other comprehensive income; (e)      other reserves; (f)      funds for general banking risk. The items referred to in points (c) to (f) shall be recognised as [OSCURATO:PERSONA] 1 only where they are available to the institution for unrestricted and immediate use to cover risks or losses as soon as these occur. 2.      For the purposes of point (c) of paragraph 1, institutions may include interim or year-end profits in [OSCURATO:PERSONA] 1 capital before the institution has taken a formal decision confirming the final profit or loss of the institution for the year only with the prior permission of the competent authority. The competent authority shall grant permission where the following conditions are met: (a)      those profits have been verified by persons independent of the institution that are responsible for the auditing of the accounts of that institution; (b)      the institution has demonstrated to the satisfaction of the competent authority that any foreseeable charge or dividend has been deducted from the amount of those profits. A verification of the interim or year-end profits of the institution shall provide an adequate level of assurance that those profits have been evaluated in accordance with the principles set out in the applicable accounting framework.’ 3 According to [OSCURATO:PERSONA] 36(1) of that regulation: ‘Institutions shall deduct the following from [OSCURATO:PERSONA] 1 items: (a)      losses for the current financial year; (b)      intangible assets with the exception of prudently valued software assets the value of which is not negatively affected by resolution, insolvency or liquidation of the institution; (c)      deferred tax assets that rely on future profitability; (d)      for institutions calculating risk-weighted exposure amounts using the [OSCURATO:PERSONA] (the IRB [OSCURATO:PERSONA]), negative amounts resulting from the calculation of expected loss amounts laid down in Articles 158 and 159; (e)      defined benefit pension fund assets on the balance sheet of the institution; (f)      direct, indirect and synthetic holdings by an institution of own [OSCURATO:PERSONA] 1 instruments, including own [OSCURATO:PERSONA] 1 instruments that an institution is under an actual or contingent obligation to purchase by virtue of an existing contractual obligation; (g)      direct, indirect and synthetic holdings of the [OSCURATO:PERSONA] 1 instruments of financial sector entities where those entities have a reciprocal cross holding with the institution that the competent authority considers to have been designed to inflate artificially the own funds of the institution; (h)      the applicable amount of direct, indirect and synthetic holdings by the institution of [OSCURATO:PERSONA] 1 instruments of financial sector entities where the institution does not have a significant investment in those entities; (i)      the applicable amount of direct, indirect and synthetic holdings by the institution of the [OSCURATO:PERSONA] 1 instruments of financial sector entities where the institution has a significant investment in those entities; (j)      the amount of items required to be deducted from [OSCURATO:PERSONA] 1 items pursuant to [OSCURATO:PERSONA] 56 that exceeds the [OSCURATO:PERSONA] 1 capital of the institution; (k)      the exposure amount of the following items which qualify for a risk weight of 1 250%, where the institution deducts that exposure amount from the amount of [OSCURATO:PERSONA] 1 items as an alternative to applying a risk weight of 1 250%: (i)      qualifying holdings outside the financial sector; (ii)      securitisation positions, in accordance with point (b) of [OSCURATO:PERSONA] 244(1), point (b) of [OSCURATO:PERSONA] 245(1) and [OSCURATO:PERSONA] 253; (iii)      free deliveries, in accordance with [OSCURATO:PERSONA] 379(3); (iv)      positions in a basket for which an institution cannot determine the risk weight under the IRB [OSCURATO:PERSONA], in accordance with [OSCURATO:PERSONA] 153(8); (v)      equity exposures under an internal models approach, in accordance with [OSCURATO:PERSONA] 155(4). (l)      any tax charge relating to [OSCURATO:PERSONA] 1 items foreseeable at the moment of its calculation, except where the institution suitably adjusts the amount of [OSCURATO:PERSONA] 1 items in so far as such tax charges reduce the amount up to which those items may be used to cover risks or losses; (m)      the applicable amount of insufficient coverage for non-performing exposures; (n)      for a minimum value commitment referred to in [OSCURATO:PERSONA] 132c(2), any amount by which the current market value of the units or shares in [collective investment undertakings] underlying the minimum value commitment falls short of the present value of the minimum value commitment and for which the institution has not already recognised a reduction of [OSCURATO:PERSONA] 1 items.’ 4 [OSCURATO:PERSONA] 92(2) of that regulation provides: ‘Institutions shall calculate their capital ratios as follows: (a)      the [OSCURATO:PERSONA] 1 capital ratio is the [OSCURATO:PERSONA] 1 capital of the institution expressed as a percentage of the total risk exposure amount; (b)      the [OSCURATO:PERSONA] 1 capital ratio is the [OSCURATO:PERSONA] 1 capital of the institution expressed as a percentage of the total risk exposure amount; (c)      the total capital ratio is the own funds of the institution expressed as a percentage of the total risk exposure amount.’ 5 [OSCURATO:PERSONA] 430(1) of that regulation provides: ‘Institutions shall report to their competent authorities on: (a)      own funds requirements, including the leverage ratio, as set out in [OSCURATO:PERSONA] 92 and [OSCURATO:PERSONA]; (b)      the requirements laid down in Articles 92a and 92b, for institutions that are subject to those requirements; (c)      large exposures as set out in [OSCURATO:PERSONA] 394; (d)      liquidity requirements as set out in [OSCURATO:PERSONA] 415; (e)      the aggregate data for each national immovable property market as set out in [OSCURATO:PERSONA] 430a(1); (f)      the requirements and guidance set out in [OSCURATO:PERSONA] 2013/36/EU [of the [OSCURATO:PERSONA] and of the [OSCURATO:PERSONA] of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending [OSCURATO:PERSONA] 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ 2013 L 176, p. 338), as amended by [OSCURATO:PERSONA] (EU) 2019/878 of the [OSCURATO:PERSONA] and of the [OSCURATO:PERSONA] of 20 May 2019 (OJ 2019 L 150, p. 253) (“[OSCURATO:PERSONA] 2013/36”),] qualified for standardised reporting, except for any additional reporting requirement under point (j) of [OSCURATO:PERSONA] 104(1) of that [OSCURATO:PERSONA]; (g)      the level of asset encumbrance, including a breakdown by the type of asset encumbrance, such as repurchase agreements, securities lending, securitised exposures or loans; …’ 6 According to [OSCURATO:PERSONA] 437 of [OSCURATO:PERSONA] 575/2013: ‘Institutions shall disclose the following information regarding their own funds: (a)      a full reconciliation of [OSCURATO:PERSONA] 1 items, [OSCURATO:PERSONA] 1 items, [OSCURATO:PERSONA] 2 items and the filters and deductions applied to own funds of the institution pursuant to Articles 32 to 36, 56, 66 and 79 with the balance sheet in the audited financial statements of the institution; (b)      a description of the main features of the [OSCURATO:PERSONA] 1 and [OSCURATO:PERSONA] 1 instruments and [OSCURATO:PERSONA] 2 instruments issued by the institution; (c)      the full terms and conditions of all [OSCURATO:PERSONA] 1, [OSCURATO:PERSONA] 1 and [OSCURATO:PERSONA] 2 instruments; (d)      a separate disclosure of the nature and amounts of the following: (i)      each prudential filter applied pursuant to Articles 32 to 35; (ii)      items deducted pursuant to Articles 36, 56 and 66; (iii)      items not deducted pursuant to Articles 47, 48, 56, 66 and 79; (e)      a description of all restrictions applied to the calculation of own funds in accordance with this [OSCURATO:PERSONA] and the instruments, prudential filters and deductions to which those restrictions apply; (f)      a comprehensive explanation of the basis on which capital ratios are calculated where those capital ratios are calculated by using elements of own funds determined on a basis other than the basis laid down in this [OSCURATO:PERSONA].’ [OSCURATO:PERSONA] 2013/36 7 [OSCURATO:PERSONA] 97 of [OSCURATO:PERSONA] 2013/36, which governs the supervisory reviews and evaluations which the competent authorities, within the meaning of point 40 of [OSCURATO:PERSONA] 4(1) of [OSCURATO:PERSONA] 575/2013, carry out in respect of institutions, as defined in point 3 of [OSCURATO:PERSONA] 4(1) of that regulation: ‘1.      … the competent authorities shall review the arrangements, strategies, processes and mechanisms implemented by the institutions to comply with this [OSCURATO:PERSONA] and [OSCURATO:PERSONA] … No 575/2013 and evaluate: (a)      risks to which the institutions are or might be exposed; … 2.      The scope of the review and evaluation referred to in paragraph 1 shall cover all requirements of this [OSCURATO:PERSONA] and of [OSCURATO:PERSONA] … No 575/2013. 3.      On the basis of the review and evaluation referred to in paragraph 1, the competent authorities shall determine whether the arrangements, strategies, processes and mechanisms implemented by institutions and the own funds and liquidity held by them ensure a sound management and coverage of their risks. …’ 8 [OSCURATO:PERSONA] 104 of that directive provides: ‘1.      For the purposes of [OSCURATO:PERSONA] 97 … and of the application of [OSCURATO:PERSONA] … No 575/2013, competent authorities shall have at least the power to: … (d)      require institutions to apply a specific provisioning policy or treatment of assets in terms of own funds requirements; … (j)      impose additional or more frequent reporting requirements, including reporting on own funds, liquidity and leverage; … 2.      For the purposes of point (j) of paragraph 1, competent authorities may only impose additional or more frequent reporting requirements on institutions where the relevant requirement is appropriate and proportionate with regard to the purpose for which the information is required and the information requested is not duplicative. …’ [OSCURATO:PERSONA] (EU) No 1 024/2013 9 Recitals 13, 15, 16, 18, 25, 30 and 55 of [OSCURATO:PERSONA] (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the [OSCURATO:PERSONA] concerning policies relating to the prudential supervision of credit institutions (OJ 2013 L 287, p. 63), state: ‘(13)      As the euro area’s central bank with extensive expertise in macroeconomic and financial stability issues, the ECB is well placed to carry out clearly defined supervisory tasks with a focus on protecting the stability of the financial system of the [[OSCURATO:PERSONA]] [OSCURATO:PERSONA]. … Specific tasks should therefore be conferred on the ECB concerning policies relating to the supervision of credit institutions within the participating [OSCURATO:PERSONA]. … (15)      Specific supervisory tasks which are crucial to ensure a coherent and effective implementation of the [[OSCURATO:PERSONA]] [OSCURATO:PERSONA]’s policy relating to the prudential supervision of credit institutions should be conferred on the ECB, while other tasks should remain with national authorities. … (16)      The safety and soundness of large credit institutions is essential to ensure the stability of the financial system. … … (18)      The exercise of the ECB’s tasks should contribute in particular to ensure that credit institutions fully internalise all costs caused by their activities so as to avoid moral hazard and the excessive risk taking arising from it. It should take full account of the relevant macroeconomic conditions in [OSCURATO:PERSONA], in particular the stability of the supply of credit and facilitation of productive activities for the economy at large. … (25)      The safety and soundness of a credit institution depend also on the allocation of adequate internal capital, having regard to the risks to which it may be exposed, and on the availability of appropriate internal organisation structures and corporate governance arrangements. The ECB should therefore have the task of applying requirements ensuring that credit institutions in the participating [OSCURATO:PERSONA] have in place robust governance arrangements, processes and mechanisms, including strategies and processes for assessing and maintaining the adequacy of their internal capital. In case of deficiencies it should also have the task of imposing appropriate measures including specific additional own funds requirements, specific disclosure requirements, and specific liquidity requirements. … (30)      The ECB should carry out the tasks conferred on it with a view to ensuring the safety and soundness of credit institutions and the stability of the financial system of the [[OSCURATO:PERSONA]] [OSCURATO:PERSONA] as well as of individual participating [OSCURATO:PERSONA] and the unity and integrity of the internal market … … (55)      The conferral of supervisory tasks implies a significant responsibility for the ECB to safeguard financial stability in the [[OSCURATO:PERSONA]] [OSCURATO:PERSONA], and to use its supervisory powers in the most effective and proportionate way. …’ 10 [OSCURATO:PERSONA] 1 of that regulation, entitled ‘Subject matter and scope’, provides: ‘[OSCURATO:PERSONA] confers on the ECB specific tasks concerning policies relating to the prudential supervision of credit institutions, with a view to contributing to the safety and soundness of credit institutions and the stability of the financial system within the [[OSCURATO:PERSONA]] [OSCURATO:PERSONA] and each [OSCURATO:PERSONA], with full regard and duty of care for the unity and integrity of the internal market based on equal treatment of credit institutions with a view to preventing regulatory arbitrage. … When carrying out its tasks according to this [OSCURATO:PERSONA], and without prejudice to the objective to ensure the safety and soundness of credit institutions, the ECB shall have full regard to the different types, business models and sizes of credit institutions. …’ 11 [OSCURATO:PERSONA] 4 of that regulation provides, in paragraph 1(f): ‘Within the framework of [OSCURATO:PERSONA] 6, the ECB shall, in accordance with paragraph 3 of this [OSCURATO:PERSONA], be exclusively competent to carry out, for prudential supervisory purposes, the following tasks in relation to all credit institutions established in the participating [OSCURATO:PERSONA]: … (f)      to carry out supervisory reviews, including where appropriate in coordination with [the [OSCURATO:PERSONA] (EBA)], stress tests and their possible publication, in order to determine whether the arrangements, strategies, processes and mechanisms put in place by credit institutions and the own funds held by these institutions ensure a sound management and coverage of their risks, and on the basis of that supervisory review to impose on credit institutions specific additional own funds requirements, specific publication requirements, specific liquidity requirements and other measures, where specifically made available to competent authorities by relevant [EU] law’. 12 [OSCURATO:PERSONA] 6 of [OSCURATO:PERSONA] 1024/2013 is worded as follows, in paragraphs 1 and 4: ‘1.      The ECB shall carry out its tasks within a single supervisory mechanism [(SSM)] composed of the ECB and national competent authorities. The ECB shall be responsible for the effective and consistent functioning of the SSM. … 4.      … … the ECB shall carry out the tasks conferred on it by this [OSCURATO:PERSONA] in respect of the three most significant credit institutions in each of the participating [OSCURATO:PERSONA], unless justified by particular circumstances.’ 13 [OSCURATO:PERSONA] 9 of [OSCURATO:PERSONA] 1024/2013: ‘1.      For the exclusive purpose of carrying out the tasks conferred on it by Articles 4(1), 4(2) and 5(2), the ECB shall be considered, as appropriate, the competent authority or the designated authority in the participating [OSCURATO:PERSONA] as established by the relevant [EU] law. For the same exclusive purpose, the ECB shall have all the powers and obligations set out in this [OSCURATO:PERSONA]. It shall also have all the powers and obligations, which competent and designated authorities shall have under the relevant [EU] law, unless otherwise provided for by this [OSCURATO:PERSONA]. In particular, the ECB shall have the powers listed in Sections 1 and 2 of this Chapter. … 2.      The ECB shall exercise the powers referred to in paragraph 1 of this [OSCURATO:PERSONA] in accordance with the acts referred to in the first subparagraph of [OSCURATO:PERSONA] 4(3). In the exercise of their respective supervisory and investigatory powers, the ECB and national competent authorities shall cooperate closely. …’ 14 [OSCURATO:PERSONA] 16 of the regulation, entitled ‘[OSCURATO:PERSONA] powers’, provides, in paragraph 1(c) and in paragraph 2(d) and (j): ‘1.      For the purpose of carrying out its tasks referred to in [OSCURATO:PERSONA] 4(1) and without prejudice to other powers conferred on the ECB, the ECB shall have the powers set out in paragraph 2 of this [OSCURATO:PERSONA] to require any credit institution, financial holding company or mixed financial holding company in participating [OSCURATO:PERSONA] to take the necessary measures at an early stage to address relevant problems in any of the following circumstances: … (c)      based on a determination, in the framework of a supervisory review in accordance with point (f) of [OSCURATO:PERSONA] 4(1), that the arrangements, strategies, processes and mechanisms implemented by the credit institution and the own funds and liquidity held by it do not ensure a sound management and coverage of its risks. 2.      For the purposes of [OSCURATO:PERSONA] 9(1), the ECB shall have, in particular, the following powers: … (d)      to require institutions to apply a specific provisioning policy or treatment of assets in terms of own funds requirements; … (j)      to impose additional or more frequent reporting requirements, including reporting on capital and liquidity positions’. [OSCURATO:PERSONA] 2014/49 /EU 15 [OSCURATO:PERSONA] 10 of [OSCURATO:PERSONA] 2014/49/EU of the [OSCURATO:PERSONA] and of the [OSCURATO:PERSONA] of 16 April 2014 on deposit guarantee schemes (OJ 2014 L 173, p. 149), entitled ‘Financing of DGSs’, provides, in the first subparagraph of paragraph 3: ‘The available financial means to be taken into account in order to reach the target level may include [IPCs]. The total share of [IPCs] shall not exceed 30% of the total amount of available financial means raised in accordance with this [OSCURATO:PERSONA].’ [OSCURATO:PERSONA] 2014/59 /EU 16 [OSCURATO:PERSONA] 103 of [OSCURATO:PERSONA] 2014/59/EU of the [OSCURATO:PERSONA] and of the [OSCURATO:PERSONA] of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending [OSCURATO:PERSONA] 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the [OSCURATO:PERSONA] and of the [OSCURATO:PERSONA] (OJ 2014 L 173, p. 190), which governs the ex ante contributions to resolution national financing arrangements, is worded as follows, in paragraph 3: ‘The available financial means to be taken into account in order to reach the target level specified in [OSCURATO:PERSONA] 102 may include [IPCs] which are fully backed by collateral of low risk assets unencumbered by any third party rights, at the free disposal and earmarked for the exclusive use by the resolution authorities for the purposes specified in [OSCURATO:PERSONA] 101(1). The share of [IPCs] shall not exceed 30% of the total amount of contributions raised in accordance with this [OSCURATO:PERSONA].’ [OSCURATO:PERSONA] (EU) No 8 06/2014 17 [OSCURATO:PERSONA] 69 of [OSCURATO:PERSONA] (EU) No 806/2014 of the [OSCURATO:PERSONA] and of the [OSCURATO:PERSONA] of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a [OSCURATO:PERSONA] and a [OSCURATO:PERSONA] and amending [OSCURATO:PERSONA] (EU) No 1093/2010 (OJ 2014 L 225, p. 1), entitled ‘Target level’, provides, in paragraph 1: ‘By the end of an initial period of eight years from 1 January 2016 or, otherwise, from the date on which this paragraph is applicable by virtue of [OSCURATO:PERSONA] 99(6), the available financial means of the [OSCURATO:PERSONA] shall reach at least 1% of the amount of covered deposits of all credit institutions authorised in all of the participating [OSCURATO:PERSONA].’ 18 [OSCURATO:PERSONA] 70 of [OSCURATO:PERSONA] 806/2014, entitled ‘ Ex ante contributions’: ‘1.      The individual contribution of each institution shall be raised at least annually and shall be calculated pro rata to the amount of its liabilities (excluding own funds) less covered deposits, with respect to the aggregate liabilities (excluding own funds) less covered deposits, of all of the institutions authorised in the territories of all of the participating [OSCURATO:PERSONA]. … 3.      The available financial means to be taken into account in order to reach the target level specified in [OSCURATO:PERSONA] 69 may include [IPCs] which are fully backed by collateral of low-risk assets unencumbered by any third-party rights, at the free disposal of and earmarked for the exclusive use by the [[OSCURATO:PERSONA] (SRB)] for the purposes specified in [OSCURATO:PERSONA] 76(1). The share of those [IPCs] shall not exceed 30% of the total amount of contributions raised in accordance with this [OSCURATO:PERSONA]. …’ Instruction 1.1.1.28 in [OSCURATO:PERSONA] 2021/451 19 Instruction 1.1.1.28 in [OSCURATO:PERSONA] (EU) 2021/451 of 17 December 2020 laying down implementing technical standards for the application of [OSCURATO:PERSONA] (EU) No 575/2013 of the [OSCURATO:PERSONA] and of the [OSCURATO:PERSONA] with regard to supervisory reporting of [credit] institutions and repealing [OSCURATO:PERSONA] (EU) No 680/2014 (OJ 2021 L 97, p. 1) (‘Instruction 1.1.1.28 of [OSCURATO:PERSONA] 2021/451’) concerns how to populate COREP Template C‑01.00, Row 0529. That instruction states: ‘[OSCURATO:PERSONA] row is intended to provide flexibility solely for reporting purposes. It shall only be populated in the rare cases that there is no final decision on the reporting of specific capital items/deductions in the current CA 1 template. As a consequence, this row shall only be populated if a CET1 capital element or a deduction from a CET1 element cannot be assigned to one of the rows 020 to 524. [OSCURATO:PERSONA] row shall not be used to assign capital items/deductions which are not covered by [[OSCURATO:PERSONA] 575/2013] into the calculation of solvency ratios (e.g. an assignment of national capital items/deductions which are outside the scope of [that regulation]).’ Background to the dispute 20 The background to the dispute is set out in paragraphs 2 to 11 of the judgment under appeal. For the purposes of the present proceedings, it may be summarised as follows. 21 The appellants, as significant entities for the purposes of [OSCURATO:PERSONA] 6(4) of [OSCURATO:PERSONA] 1024/2013, fall under the direct prudential supervision of the ECB within the context of the SSM. 22 On 13 April 2021, in connection with its task of prudential supervision, the ECB sent the appellants and norisbank GmbH a questionnaire relating to their treatment of IPCs, which constitute an option for discharging the obligation to contribute to the [OSCURATO:PERSONA] (SRF), to the national resolution funds, in accordance with [OSCURATO:PERSONA] 70(3) of [OSCURATO:PERSONA] 806/2014 and [OSCURATO:PERSONA] 103(3) of [OSCURATO:PERSONA] 2014/59, respectively, or to DGSs, in accordance with [OSCURATO:PERSONA] 10(3) of [OSCURATO:PERSONA] 2014/49. IPCs generally take the form of a contract between the credit institutions giving them and the authority responsible for the relevant resolution fund or DGSs, whereby it is agreed that the amount due in respect of contributions to those funds or DGSs will be paid at that authority’s first request. The contract is accompanied by a guarantee that the funds will be made exclusively available, generally in the form of a cash deposit, in an amount equal to the contribution due. 23 The appellants and norisbank replied to the questionnaire on 11 May 2021. 24 On 8 November 2021, the ECB sent the appellants and norisbank a draft decision following completion of the [OSCURATO:PERSONA] and [OSCURATO:PERSONA] (SREP), including, inter alia, a prudential requirement that the cumulative amount of the IPCs was to be deducted from the [OSCURATO:PERSONA] 1 (CET 1) capital. The appellants and norisbank were invited to make observations on that draft. 25 After receiving the observations of the appellants and those of norisbank, the ECB, pursuant to [OSCURATO:PERSONA] 4(1)(f) and [OSCURATO:PERSONA] 16 of [OSCURATO:PERSONA] 1024/2013, adopted [OSCURATO:PERSONA] ECB-SSM-2022-DEDEB-6 of 2 February 2022 (‘the decision of 2 February 2022’). 26 In that decision, the ECB took the view that, in accordance with [OSCURATO:PERSONA] 16(1)(c) of that regulation, the arrangements, strategies, processes and mechanisms implemented by the appellants and norisbank and the own funds and liquidity held by them did not ensure the sound management and coverage of their risks since the appellants and norisbank overstated their CET 1 capital. 27 In order to cover that risk, the ECB imposed a deduction measure pursuant to [OSCURATO:PERSONA] 16(2)(d) of that regulation (‘the deduction measure’) and a reporting requirement pursuant to [OSCURATO:PERSONA] 16(2)(j) thereof (‘the reporting requirement’). 28 According to the formula set out in paragraph 1.3 of the decision of 2 February 2022, the extent of the deduction was equivalent to the value of the sums put up as collateral for IPCs and recorded as assets in the balance sheets of the appellants and norisbank, minus the items capable of reducing the risk, that is to say, the CET 1 capital held by the appellants and norisbank relating to the sums put up as collateral and, where applicable, the positive economic value attributed to the recorded assets, taking into account those sums. The implementation of that measure was necessary, provided that no waiver of own funds requirements applied at an individual level. 29 The reporting requirement was intended to enable the ECB to ensure that the deduction imposed on the appellants was correctly reflected. The action before the [OSCURATO:PERSONA] and the judgment under appeal 30 By application lodged at the Registry of the [OSCURATO:PERSONA] on 11 April 2022, the appellants and norisbank brought an action seeking the partial annulment of the decision of 2 February 2022. 31 As part of a new SREP cycle, the ECB adopted the decision of 21 December 2022, which replaced the decision of 2 February 2022 with effect from 1 January 2023 and which maintained the deduction measure and the reporting requirement. 32 In order to reach the decision of 21 December 2022, the ECB followed the same procedure as that described in paragraphs 22 to 25 above. 33 On 1 March 2023, the appellants and norisbank lodged at the Registry of the [OSCURATO:PERSONA] a statement of modification of the application in which they also sought the partial annulment of the decision of 21 December 2022, relying on the same first two pleas as those initially put forward in the application against the decision of 2 February 2022. By contrast, taking the view that the decision of 21 December 2022 discontinued the deduction measure and the reporting requirement previously imposed on an individual level with regard to [OSCURATO:PERSONA] AG and norisbank, the appellants and norisbank withdrew the third plea initially put forward. 34 Thus, in support of their action, the appellants and norisbank relied on two pleas in law, alleging (i) an error of law in that the ECB exceeded the powers conferred on it by [OSCURATO:PERSONA] 1024/2013 and acted in breach of general principles of EU law, and (ii) a breach of the principle of proportionality. 35 By letter of 24 April 2023, the [OSCURATO:PERSONA] of the [OSCURATO:PERSONA] informed the parties that the [OSCURATO:PERSONA] had decided to adopt a measure of organisation of procedure, requesting the ECB to provide the [OSCURATO:PERSONA], in anonymised form, with extracts of the SREP decisions adopted by it relating to the same year as the decisions adopted in respect of the appellants and norisbank (‘the SREP decisions’) concerning the examination of the impact of the IPCs on the situation of the other credit institutions that were not parties to the proceedings. In response, on 10 May 2023 the ECB provided the [OSCURATO:PERSONA] with the relevant parts of the 48 SREP decisions in which the impact of the IPCs on the individual situation of the credit institutions to which those decisions were addressed had been examined. 36 In their statement of modification of the application, and subsequently, in accordance with [OSCURATO:PERSONA] 86 of the Rules of Procedure of the [OSCURATO:PERSONA], by separate document lodged at the Registry of the [OSCURATO:PERSONA] on 10 May 2023, [OSCURATO:PERSONA] and norisbank applied for a declaration that there is no longer any need to adjudicate in so far as the action concerned them on an individual level. 37 By the judgment under appeal, the [OSCURATO:PERSONA] dismissed the action as inadmissible, in so far as [OSCURATO:PERSONA] and norisbank were concerned, each on an individual basis, to the extent that they did not have an interest in bringing proceedings when the action was brought. 38 As to the substance, the [OSCURATO:PERSONA] examined and rejected all the pleas put forward by [OSCURATO:PERSONA] on a consolidated basis and BHW Bausparkasse AG on an individual basis. 39 As regards the first plea in law put forward by the appellants, the [OSCURATO:PERSONA], in paragraphs 42 to 44 of the judgment under appeal, found, first of all, that the argument that the ECB had no power to require the full deduction of certain items from own funds had already been rejected in the judgments of 9 September 2020, [OSCURATO:PERSONA] v ECB (T‑143/18, EU:T:2020:389); of 9 September 2020, Crédit agricole and Others v ECB (T‑144/18, EU:T:2020:390); of 9 September 2020, Confédération nationale du Crédit mutuel and Others v ECB (T‑145/18, EU:T:2020:391); of 9 September 2020, BPCE and Others v ECB (T‑146/18, EU:T:2020:392); of 9 September 2020, [OSCURATO:PERSONA] and Others v ECB (T‑149/18, EU:T:2020:393); and of 9 September 2020, BNP Paribas v ECB (T‑150/18 and T‑345/18, EU:T:2020:394) (‘the 2020 judgments’) and, moreover, that [OSCURATO:PERSONA] 36 of [OSCURATO:PERSONA] 575/2013 did not preclude the ECB from being able to identify a risk linked to CET 1 capital during its supervisory review and therefore did not prohibit the imposition of an additional prudential measure, such as a deduction measure, under its ‘second pillar’ powers. 40 Next, in paragraphs 46 to 48 and 50 to 56 of the judgment under appeal, the [OSCURATO:PERSONA] rejected the other arguments raised by the appellants in support of the first plea, alleging the legal nature of IPCs, the economic ownership of the cash collateral provided to secure the IPCs and the alleged infringement of [OSCURATO:PERSONA] 16(2)(j) of [OSCURATO:PERSONA] 1024/2013, respectively. 41 In paragraphs 79 to 88 of the judgment under appeal, the [OSCURATO:PERSONA] also rejected the argument that the ECB failed to carry out an individual examination of the appellants’ situation by ruling, first, that identical risks could be covered by identical measures, and, second, that the ECB had taken into account the accounting treatment applied by the appellants to the IPCs as a factual element, without however calling it into question. 42 In addition, in paragraphs 91 to 97 of that judgment, the [OSCURATO:PERSONA] rejected the arguments that the methodology applied by the ECB overrode the statutory and contractual rules governing IPCs and collateral linked to them as well as the established and applicable accounting standards, and that it infringed [OSCURATO:PERSONA] 16(1)(c) and (2)(d) of [OSCURATO:PERSONA] 1024/2013. 43 Last, in paragraphs 99 to 110 of that judgment, the [OSCURATO:PERSONA] held that the complaints alleging manifest errors of assessment by the ECB and incorrect assessment of the arrangements, strategies, processes and mechanisms to manage and monitor a potential IPC risk were unfounded. 44 Finally, the [OSCURATO:PERSONA] rejected the second plea in law by holding, in paragraphs 121 to 125 of the judgment under appeal, that the review carried out by the ECB under the principle of proportionality, with regard to both the deduction measure and the reporting requirement, had been structured and performed properly. Forms of order sought 45 By their appeal, the appellants claim that the [OSCURATO:PERSONA] should: –        set aside in part the judgment under appeal, in so far as it dismisses the action as unfounded and orders them to pay the costs; –        partially annul the decision of 21 December 2022, with regard to the requirements imposed on the appellants pursuant to paragraph 1.3 of that decision; and –        order the ECB to pay the costs, including the costs incurred until the replacement of the decision of 2 February 2022, in so far as the [OSCURATO:PERSONA] found that the action was admissible. 46 The ECB contends that the [OSCURATO:PERSONA] should: –        dismiss the appeal in its entirety; and –        order the appellants to pay the costs. The appeal 47 The appellants rely in support of their appeal on two grounds of appeal, alleging that the [OSCURATO:PERSONA] (i) erred in law in finding that the ECB acted within its powers when it imposed the deduction measure and the reporting requirement on them, and (ii) infringed [OSCURATO:PERSONA] 16(1)(c) of [OSCURATO:PERSONA] 1024/2013. The first ground of appeal, alleging a mis understanding of the applicable rules and a misinterpretation of the ECB’s tasks and powers under [OSCURATO:PERSONA] 1 024/2013 Arguments of the parties 48 By the first ground of appeal, divided into three parts, the appellants claim that the [OSCURATO:PERSONA] erred in law in paragraphs 42 to 44, 46, and 53 to 56 of the judgment under appeal, by misunderstanding the applicable rules on own funds and own funds requirements, leading to a misinterpretation of the tasks and powers of the ECB under [OSCURATO:PERSONA] 1024/2013. 49 By the first part of the first ground of appeal, the appellants submit that Articles 26 to 50 of [OSCURATO:PERSONA] 575/2013 lay down in an exhaustive and binding manner the applicable rules on own funds, in particular those relating to the determination of the CET 1 capital of credit institutions, which apply both to the ECB and to the institutions concerned. Pursuant to Articles 4 and 16 of [OSCURATO:PERSONA] 1024/2013, the ECB is tasked only with ensuring compliance with the own funds requirements laid down in Articles 92 to 94 of [OSCURATO:PERSONA] 575/2013, which are intended to ensure that the supervised credit institutions hold sufficient levels of own funds to cover risks in their business. Such a limitation is also reflected in the binding disclosure requirements as to own funds laid down in [OSCURATO:PERSONA] 437 of that regulation, which requires those institutions to disclose deductions made pursuant to [OSCURATO:PERSONA] 36 et seq. of that regulation. 50 The appellants argue, in essence, that, so long as the credit institutions comply with the rules laid down in [OSCURATO:PERSONA] 26 et seq. of [OSCURATO:PERSONA] 575/2013, and with the applicable accounting standards, namely the [OSCURATO:PERSONA] (IFRS) that apply pursuant to [OSCURATO:PERSONA] (EC) No 1606/2002 of the [OSCURATO:PERSONA] and of the [OSCURATO:PERSONA] of 19 July 2002 on the application of international accounting standards (OJ 2002 L 243, p. 1), there could be no risk of overstatement of CET 1 capital, let alone a prudential risk capable of justifying the adoption by the ECB of a measure falling within the second pillar, for the purposes of Articles 4 and 16 of [OSCURATO:PERSONA] 1024/2013. 51 By the second part of the first ground of appeal, the appellants claim that, in so far as the [OSCURATO:PERSONA] held in paragraphs 42 and 43 of the judgment under appeal that the ECB could, in the context of its supervisory tasks, and in particular under [OSCURATO:PERSONA] 4(1)(f) of [OSCURATO:PERSONA] 1024/2013, impose corrective measures on the basis of vulnerabilities and weaknesses identified, it failed to undertake a methodologically correct analysis of the wording, the context and the purpose of the relevant provisions, including, in particular, [OSCURATO:PERSONA] 16(2)(d) of that regulation. 52 In that regard, they submit, first of all, that the deduction from CET 1 capital of the sums paid as collateral for the IPCs, imposed on them by the ECB, constitutes a measure intended to circumvent the exhaustive rules laid down in [OSCURATO:PERSONA] 26 et seq. of [OSCURATO:PERSONA] 575/2013, and the intention of the EU legislature to treat IPCs and collateral inextricably linked to them differently to direct cash contributions paid for the ex ante financing of the SRF or DGSs. 53 Next, the appellants submit that the [OSCURATO:PERSONA] interpretation of [OSCURATO:PERSONA] 16(2)(d) of [OSCURATO:PERSONA] 1024/2013 amounts to depriving the provisions governing the use of IPCs, namely [OSCURATO:PERSONA] 70(3) of [OSCURATO:PERSONA] 806/2014, [OSCURATO:PERSONA] 103(3) of [OSCURATO:PERSONA] 2014/59 and [OSCURATO:PERSONA] 10(3) of [OSCURATO:PERSONA] 2014/49, of their effectiveness. In particular, by allowing credit institutions to fulfil their obligation to provide ex ante funding to resolution funds and DGSs, and by taking into account the option afforded by the applicable accounting standards to treat IPCs as off-balance-sheet items, the EU legislature intended to preserve the ability of those institutions to help financing the real economy. By holding that IPC risks may continue to exist and fall within the scope of prudential supervision by the ECB, the judgment under appeal threatens the balance struck by that legislature between the financing of the resolution funds and the DGSs, on the one hand, and the financing of the real economy by those credit institutions, on the other. 54 According to the appellants, last, the broad interpretation of [OSCURATO:PERSONA] 16(2)(d) of [OSCURATO:PERSONA] 1024/2013 adopted by the [OSCURATO:PERSONA] manifestly infringes the principle of legal certainty by imposing on the appellants IPC requirements that do not have a sufficiently clear and precise legal basis as regards the wording, context and purpose of that provision, or any other provision of that regulation. 55 By the third part of the first ground of appeal, the appellants submit that the reporting requirement imposed by the ECB amends and modifies the reporting requirements set out in [OSCURATO:PERSONA] 430(1)(a) of [OSCURATO:PERSONA] 575/2013, read in conjunction with [OSCURATO:PERSONA] 2021/451. In their view, that measure thus constitutes a clear infringement of Instruction 1.1.1.28 of that implementing regulation on how to populate COREP Template C‑01.00, Row 0529, as referred to in paragraph 19 above, and, consequently, a breach of the principle of legal certainty. 56 At the outset, the ECB contends that the appellants’ argument alleging that the EU legislation governing the use of IPCs would be deprived of its effectiveness and the argument based on Instruction 1.1.1.28 of [OSCURATO:PERSONA] 2021/451 are inadmissible, in so far as they are raised for the first time at the appeal stage. 57 In any event, the ECB takes the view that the first ground of appeal is unfounded. 58 In their reply, the appellants claim that the ECB’s plea of inadmissibility should be dismissed since their arguments expand upon the arguments already raised in the application at first instance. Findings of the [OSCURATO:PERSONA] – Admissibility 59 In accordance with [OSCURATO:PERSONA] 170(1) of the Rules of Procedure of the [OSCURATO:PERSONA] of Justice, the subject matter of the proceedings before the [OSCURATO:PERSONA] may not be changed in the appeal. [OSCURATO:PERSONA] of Justice’s jurisdiction in an appeal is, after all, limited to assessing the findings of law on the pleas argued at first instance. A party cannot, therefore, put forward for the first time before the [OSCURATO:PERSONA] of Justice a plea in law which it has not raised before the [OSCURATO:PERSONA] since that would allow that party to bring before the [OSCURATO:PERSONA] of Justice, whose jurisdiction in appeal proceedings is limited, a wider case than that heard by the [OSCURATO:PERSONA]. [OSCURATO:PERSONA], an appellant is entitled to lodge an appeal relying, before the [OSCURATO:PERSONA] of Justice, on grounds and arguments which arise from the judgment under appeal itself and seek to criticise, in law, its correctness (judgment of 4 March 2021, [OSCURATO:PERSONA] v [OSCURATO:PERSONA] , C‑362/19 P, EU:C:2021:169, paragraph 47 and the case-law cited). 60 In addition, it is clear from the case-law of the [OSCURATO:PERSONA] that an argument is admissible where it expands upon an argument raised previously in the original application and is closely connected with that previous argument (judgment of 16 July 2020, [OSCURATO:PERSONA] and [OSCURATO:PERSONA] v [OSCURATO:PERSONA] , C‑606/18 P, EU:C:2020:571, paragraph 55). 61 In the present case, the ECB complains that the appellants change the subject matter of the dispute submitted before the [OSCURATO:PERSONA], by raising for the first time, in the appeal, first, the argument alleging that the EU legislation governing the use of IPCs would be deprived of its effectiveness, and, second, the argument alleging infringement of Instruction 1.1.1.28 of [OSCURATO:PERSONA] 2021/451. 62 In that regard, it is sufficient to note that the first argument expands upon the argument set out in the application at first instance, in so far as the appellants merely specify the applicable legal and contractual rules governing IPCs and the alleged change in the legal nature of IPCs and collateral inextricably linked to them in order to challenge the [OSCURATO:PERSONA] interpretation, without the appellants’ legal and economic position with regard to them having been taken into account. As to the second argument, it relates to paragraph 56 of the judgment under appeal and seeks to criticise, in law, its correctness. 63 It follows that, in accordance with the case-law set out in paragraphs 59 and 60 above, the arguments put forward by the appellants in support of the first ground of appeal are admissible. – Substance 64 The first ground of appeal is divided into three parts, alleging errors of law by the [OSCURATO:PERSONA] in finding, first, in breach of the rules applicable to own funds and own funds requirements, that a risk of overstatement of CET 1 capital may indeed exist and justify the adoption, by the ECB, of a decision imposing a measure adopted pursuant to [OSCURATO:PERSONA] 16(2)(d) of [OSCURATO:PERSONA] 1024/2013; second, that the ECB has the power to impose on the appellants a measure to deduct from CET 1 capital the sums paid as collateral for the IPCs, and, third, that the reporting obligation neither amends nor modifies that laid down in [OSCURATO:PERSONA] 430(1) of [OSCURATO:PERSONA] 575/2013. 65 As a preliminary point, it must be borne in mind that the present case falls within the context of the EU regulatory framework adopted following the 2008 financial crisis, aimed at ensuring the stability and safety of banking in the [OSCURATO:PERSONA] and supplementing the economic and monetary union and the internal market by creating a banking union. That framework is characterised by the establishment of a single rule book, applicable in an identical manner to credit institutions in all the [OSCURATO:PERSONA] participating in the banking union, namely [OSCURATO:PERSONA] whose currency is the euro or [OSCURATO:PERSONA] whose currency is not the euro but which have established close cooperation in accordance with [OSCURATO:PERSONA] 7 of [OSCURATO:PERSONA] 1024/2013. 66 [OSCURATO:PERSONA] 2013/36 and [OSCURATO:PERSONA] 575/2013 are an integral part of that rule book. Together, they form the legal framework governing banking activities, the supervisory framework and the prudential rules applicable to credit institutions within the [OSCURATO:PERSONA]. 67 In that context, the general minimum prudential requirements, with which credit institutions supervised under [OSCURATO:PERSONA] 2013/36 must comply, are primarily set out in [OSCURATO:PERSONA] 575/2013 and are commonly referred to as ‘first pillar’ requirements. 68 [OSCURATO:PERSONA], [OSCURATO:PERSONA] 575/2013 defines the instruments that may be classified as CET 1 capital, namely own funds of the highest quality intended to ensure continuity of the business of credit institutions and prevent situations of insolvency. Second, that regulation requires credit institutions to apply the prudential filters referred to in Articles 32 to 35 thereof, which consist inter alia in excluding certain items of own funds from CET 1 capital and adjusting the value of their assets. Those institutions must also deduct the items listed in Articles 36 to 47 of that regulation. In addition, that regulation provides that those institutions are required to hold a certain percentage of own funds in line with their risk profile, in order to enhance their financial soundness. 69 The general prudential requirements set out in [OSCURATO:PERSONA] 575/2013 are supplemented by supervisory reviews in the context of which the competent authorities must adopt decisions as a result of their ongoing supervision of each individual credit institution. Those additional prudential measures fall under the ‘second pillar’. 70 In that respect, [OSCURATO:PERSONA] 1024/2013 established the SSM and its objective is to ensure the safety and soundness of credit institutions. [OSCURATO:PERSONA] that regulation, adopted on the basis of the Treaty on the Functioning of the [OSCURATO:PERSONA], and in particular [OSCURATO:PERSONA] 127(6) thereof, the ECB is empowered to impose, in the exercise of its supervisory tasks referred to in [OSCURATO:PERSONA] 4(1) of that regulation, individual measures which take into account the specific situation of each institution, with regard to all credit institutions established in the participating [OSCURATO:PERSONA]. 71 The task and powers conferred on the ECB under [OSCURATO:PERSONA] 1024/2013 fall under [OSCURATO:PERSONA] 97 of [OSCURATO:PERSONA] 2013/36, according to which the competent authorities are required to put into place a supervisory review and evaluation process for the arrangements, strategies, processes and mechanisms implemented by credit institutions, namely the SREP, in order to ensure compliance with that directive and with [OSCURATO:PERSONA] 575/2013. 72 The SREP is to include the supervisory assessment of the risks to which those institutions are or might be exposed, taking into account the nature, scale and complexity of their activities. On the basis of that assessment, the competent authorities determine whether the arrangements, strategies, processes and mechanisms applied by those institutions and the own funds and liquidity held by them ensure a sound management and adequate coverage of their risks. Each year, or at least at regular intervals, the ECB is to adopt a decision under the SREP, which is to enter into force for the credit institution concerned on the date specified therein. 73 Pursuant to [OSCURATO:PERSONA] 104 of [OSCURATO:PERSONA] 2013/36, competent authorities may, where appropriate, in order to address identified risks posed by credit institutions which are not, or are not sufficiently, covered or managed, exercise supervisory powers, which include the power to require them to apply a specific provisioning policy or treatment of assets in terms of own funds requirements. 74 It is in the light of those preliminary observations that the appellants’ arguments raised in the context of their first ground of appeal are to be examined. 75 In the present case, as regards the first and second parts of the first ground of appeal, which it is appropriate to examine together, in paragraph 40 of the judgment under appeal, the [OSCURATO:PERSONA] first of all noted that, according to the ECB’s considerations, the accounting treatment adopted by the appellants consisted, inter alia, of treating IPCs as off-balance-sheet items, while recording as assets in the balance sheet, as a ‘claim for repayment’, an amount equivalent to that of the sums put up with the SRF, national resolution funds or DGSs as collateral for IPCs. It thus held that that specific accounting choice meant that the contribution to the funding of the resolution funds and DGSs was not reflected in the appellants’ balance sheet, resulting in a risk of overstatement of their CET 1 capital. 76 In paragraphs 42 to 44 of that judgment, the [OSCURATO:PERSONA] then recalled the 2020 judgments and held that the ECB has the power to impose a deduction measure in order to remedy a risk of overstatement of CET 1 capital, since [OSCURATO:PERSONA] 36 of [OSCURATO:PERSONA] 575/2013 does not preclude either identification, by the ECB, of a risk linked to CET 1 capital during its supervisory review, or, consequently, the adoption of an additional prudential measure, such as a deduction measure, in the exercise of the powers conferred on it under the ‘second pillar’. 77 In paragraphs 41, 46 and 47 of that judgment, the [OSCURATO:PERSONA] also stated that the risk identified by the ECB did not correspond to that arising from a possible request for payment of IPCs, but rather to the risk of overstatement of CET 1 capital in relation to the actual loss absorption capacity of the appellants, given the accounting treatment of IPCs adopted by them, which does not take account of the unavailability of the sums put up as collateral. 78 Last, the [OSCURATO:PERSONA] held, in paragraph 57 of the judgment under appeal, that the ECB had the power to impose a measure to deduct from CET 1 capital the sums paid as collateral for the IPCs provided that it had carried out an individual examination of the situation of the credit institutions concerned in the light of the prudential risk identified, that examination leading to the conclusion that that risk was not sufficiently managed or covered. 79 In that connection, as regards, in the first place, the interpretation of [OSCURATO:PERSONA] 4(1)(f) and [OSCURATO:PERSONA] 16(1)(c) of [OSCURATO:PERSONA] 1024/2013, it is settled case-law that, in interpreting a provision of EU law it is necessary to consider not only its wording, but also the context in which it occurs and the objectives pursued by the rules of which it is part (see judgments of 17 November 1983, Merck , 292/82, EU:C:1983:335, paragraph 12, and of 25 February 2025, BSH Hausgeräte , C‑339/22, EU:C:2025:108, paragraph 27). 80 As regards, first of all, the wording of those provisions, it should be noted that, under [OSCURATO:PERSONA] 4(1)(f) of [OSCURATO:PERSONA] 1024/2013, the ECB was granted exclusive competence, first, to carry out supervisory reviews in order to determine whether the arrangements, strategies, processes and mechanisms put in place by credit institutions and the own funds held by those institutions ensure a sound management and coverage of their risks and, second, on the basis of that prudential review to impose on credit institutions, inter alia, specific additional own funds requirements, specific liquidity requirements and other measures. 81 For the purpose of carrying out its tasks referred to in [OSCURATO:PERSONA] 4(1) of [OSCURATO:PERSONA] 1024/2013, [OSCURATO:PERSONA] 16(1)(c) of that regulation provides that the ECB has powers, as set out in [OSCURATO:PERSONA] 16(2) of that regulation, to require any credit institution to take the necessary measures to address relevant problems where the arrangements, strategies, processes and mechanisms implemented by those institutions and the own funds and liquidity held by them do not ensure a sound management and coverage of its risks. Pursuant to [OSCURATO:PERSONA] 16(2)(d) of that regulation, the ECB has, inter alia, the power to require those institutions to apply a specific provisioning policy or treatment of assets in terms of own funds requirements. 82 [OSCURATO:PERSONA], in the context of its supervisory tasks under [OSCURATO:PERSONA] 4(1)(f) of [OSCURATO:PERSONA] 1024/2013, the ECB carries out an individual examination to verify the adequacy of the own funds of any credit institution supervised directly by it in relation to the risks to which such an institution is or might be exposed. Once those checks have been carried out, the ECB may, on the basis of vulnerabilities and weaknesses identified, impose specific additional own funds requirements, specific publication requirements, specific liquidity requirements and other measures on the credit institution concerned. 83 The addition of the words ‘other measures’ in [OSCURATO:PERSONA] 4(1)(f) of [OSCURATO:PERSONA] 1024/2013 and the use of the expression ‘specific … policy or treatment’ in [OSCURATO:PERSONA] 16(2)(d) of that regulation suggest that, within the limits imposed by the legal basis of that regulation, namely [OSCURATO:PERSONA] 127(6) TFEU, the EU legislature adopted a broad definition of the supervisory powers conferred on the ECB. 84 The decisions adopted by the ECB relating to the prudential supervision of a credit institution, such as the decision of 21 December 2022, are acts which mean that the ECB has a certain discretion in that regard since, as stated in recital 55 of [OSCURATO:PERSONA] 1024/2013, the conferral of supervisory tasks implies a significant responsibility for the ECB to safeguard financial stability in the [OSCURATO:PERSONA], and to use its supervisory powers in the most effective and proportionate way (see, to that effect, judgment of 8 May 2019, [OSCURATO:PERSONA]Württemberg v ECB , C‑450/17 P, EU:C:2019:372, paragraph 86). 85 Next, as regards the context of Articles 4 and 16 of [OSCURATO:PERSONA] 1024/2013, it must be noted that it is clear from the first paragraph of [OSCURATO:PERSONA] 1 of that regulation that specific tasks concerning policies relating to the prudential supervision of credit institutions are conferred on the ECB, with a view to contributing to the safety and soundness of credit institutions and the stability of the financial system within the [OSCURATO:PERSONA] and in each [OSCURATO:PERSONA], with full regard and duty of care for the unity and integrity of the internal market based on equal treatment of those institutions with a view to preventing regulatory arbitrage. 86 Moreover, in accordance with [OSCURATO:PERSONA] 9(1) of that regulation, the powers set out in [OSCURATO:PERSONA] 16 thereof form only part of the powers conferred on the ECB. The ECB is also to have all the powers and obligations which competent designated authorities have under the relevant EU law unless otherwise provided for by that regulation. The powers of the ECB include the investigatory powers provided for in Articles 10 to 13 of [OSCURATO:PERSONA] 1024/2013 and the specific supervisory powers listed in Articles 14, 15 and 18 of that regulation, including the powers to grant and withdraw the authorisation to exercise the business of credit institution, the power to assess acquisitions of qualifying holdings and the power to impose administrative pecuniary penalties. 87 Last, it is apparent from recitals 25, 30 and 55 of [OSCURATO:PERSONA] 1024/2013 that the objective pursued by that regulation is to establish an efficient and effective framework for the ECB to carry out specific supervisory tasks with regard to credit institutions. That framework is intended inter alia to ensure the consistent application of the single rule book to credit institutions, the safety and soundness of credit institutions and the stability of the financial system of the [OSCURATO:PERSONA] as well as of the individual [OSCURATO:PERSONA] participating in the banking union, and to safeguard the unity and integrity of the internal market (see, to that effect, judgment of 2 October 2019, Crédit mutuel [OSCURATO:PERSONA] v ECB , C‑152/18 P and C‑153/18 P, EU:C:2019:810, paragraph 55). 88 The objective of the requirements and powers conferred on the ECB under the ‘second pillar’ is therefore to enhance the soundness of credit institutions, by allowing the identification of risks which are not covered, or not sufficiently covered, by the ‘first pillar’ requirements, in relation to which the ‘second pillar’ rules follow a logic of complementarity and specificity. 89 Thus, although the ‘first pillar’ rules establish the general standards applicable to all credit institutions falling within the scope of [OSCURATO:PERSONA] 575/2013 and of [OSCURATO:PERSONA] 2013/36, the grant of powers to the competent authorities, including the ECB, to impose ‘second pillar’ measures makes it possible to adapt prudential requirements to the specific characteristics and needs of each credit institution, thereby ensuring maximum safety of the financial system within the [OSCURATO:PERSONA] and in each [OSCURATO:PERSONA]. 90 In that regard, neither the clear distinction made by the appellants between own funds and own funds requirements nor the fact that the wording of [OSCURATO:PERSONA] 16(2)(d) of [OSCURATO:PERSONA] 1024/2013 expressly refers to ‘own funds requirements’ is such as to call into question the findings made in paragraphs 80 to 89 above. As the ECB rightly submits, the various own funds requirements are inextricably linked and cannot be considered independently of the factors used to determine them, namely the own funds held by the credit institution and the total risk exposure amount. ‘Own funds requirements’ must be understood to mean the adequacy of the own funds in relation to the risk to which such an institution is exposed, in other words, according to [OSCURATO:PERSONA] 92(2) of [OSCURATO:PERSONA] 575/2013, the ratio of own funds held by the credit institution, calculated in accordance with [OSCURATO:PERSONA] of that regulation, over that institution’s total risk exposure amount. 91 It follows that, by the combined provisions of [OSCURATO:PERSONA] 4(1)(f), [OSCURATO:PERSONA] 16(1)(c) and [OSCURATO:PERSONA] 16(2)(d) of [OSCURATO:PERSONA] 1024/2013, the EU legislature intended to confer on the ECB the power to impose, by means of individual decisions which are to be duly reasoned, well founded and amenable to judicial review, prudential measures or adjustments, such as deduction measures, intended to offset specific and individual risks to which supervised credit institutions are or might be exposed. 92 An interpretation to the contrary could not be regarded as consistent with the task conferred on the ECB by [OSCURATO:PERSONA] 1024/2013. To find that the EU legislature intended to allow credit institutions, by using IPCs, to expose themselves to risks not covered by own funds would be inconsistent with the stricter measures adopted in response to the 2008 financial crisis, which triggered an enhanced regulatory framework applicable to those institutions and enhanced prudential supervision with regard to those institutions. 93 Consequently, the fact, first, that CET 1 capital is calculated in accordance with [OSCURATO:PERSONA] 26 et seq. of [OSCURATO:PERSONA] 575/2013 and, in particular, that [OSCURATO:PERSONA] 36 of that regulation does not include IPCs among the items which must be deducted by default from the own funds of all credit institutions, and, second, that [OSCURATO:PERSONA] 437 of that regulation, which provides for the disclosure of information relating to own funds, contains no reference to any deductions linked to IPCs given, does not demonstrate the EU legislature’s intention of excluding the consequences arising from the accounting treatment of IPCs from the scope of Articles 4 and 16 of [OSCURATO:PERSONA] 1024/2013. 94 In other words, the fact that the impact of the accounting treatment of IPCs on CET 1 capital and the possible deduction of IPCs from CET 1 capital are not expressly provided for by the rules applicable under the ‘first pillar’ cannot justify the exclusion of IPCs from the scope of prudential supervision or make it impossible for the ECB to identify a risk of overstatement of CET 1 capital or exclude them from the measures that the ECB may take under the ‘second pillar’. 95 In the second place, contrary to what the appellants submit in support of their claims, the fact that the choices they have made are consistent with the applicable regulatory accounting framework and remain within the limits authorised by that framework does not preclude them from being exposed to a prudential risk not taken into account by the ‘first pillar’ requirements, nor does it preclude the ECB from imposing the necessary corrective measures, following an individual examination showing that the arrangements put in place, or the own funds and liquidity held, are not sufficient to cover that risk. In view of the difference between the objectives of accounting standards and those pursued by prudential standards, those measures may include, inter alia, a deduction measure or a reporting requirement, such as those provided for in the decision of 21 December 2022, provided that they do not call into question the accounting treatment of IPCs in accordance with the IFRS applicable under [OSCURATO:PERSONA] 1606/2002. 96 That interpretation is confirmed by the ‘Guidelines on payment commitments under [OSCURATO:PERSONA] 2014/49/EU on deposit guarantee schemes’, adopted by EBA, which the ECB declared that it complied with, according to [OSCURATO:PERSONA] 16(3) of [OSCURATO:PERSONA] (EU) No 1093/2010 of the [OSCURATO:PERSONA] and of the [OSCURATO:PERSONA] of 24 November 2010 establishing a [OSCURATO:PERSONA] ([OSCURATO:PERSONA]), amending [OSCURATO:PERSONA] 716/2009/EC and repealing [OSCURATO:PERSONA] 2009/78/EC (OJ 2010 L 331, p. 12), by written notification sent to that authority on 5 February 2019. 97 Those guidelines, which, although not binding, may nevertheless provide guidance to the courts of the [OSCURATO:PERSONA] in interpreting the applicable legislation, state that, in certain circumstances, IPCs may be subject to prudential measures. More specifically, they state, in paragraphs 31 to 33, that the prudential treatment of IPCs should aim to ensure that there is a level playing field and mitigate the pro-cyclical effect of IPCs depending on their accounting treatment. Where the accounting treatment results in an IPC being fully reflected on the balance sheet as a liability, or in the collateral linked to it being fully reflected in the profit and loss statement, there is no need to apply an ad hoc prudential treatment to mitigate the pro-cyclical effects. On the contrary, where, following that treatment, the IPC and the collateral linked to it are not fully reflected in the balance sheet, competent authorities, within the SREP, should assess the risks to which the capital and liquidity positions of the credit institution concerned would be exposed and, where appropriate, exercise the appropriate powers to ensure that those risks are mitigated by additional capital and/or liquidity requirements. 98 Furthermore, in its Report to the [OSCURATO:PERSONA] and the [OSCURATO:PERSONA] on the [OSCURATO:PERSONA] established pursuant to [OSCURATO:PERSONA] (EU) No 1024/2013 (COM(2017) 591 final) of 11 October 2017, the [OSCURATO:PERSONA] encouraged the ECB to apply the whole panoply of supervisory powers to allow risks to be addressed through the most suitable supervisory tools. It also acknowledged that those powers include the possibility for the ECB to influence the provisioning level of a credit institution within the limits of the applicable accounting framework and to apply the necessary adjustments, such as deductions, filters and similar measures, to own funds calculations where the accounting treatment applied by such an institution is considered not prudent from a supervisory perspective. 99 In the third place, the appellants claim that the [OSCURATO:PERSONA] interpretation of [OSCURATO:PERSONA] 16(2)(d) of [OSCURATO:PERSONA] 1024/2013 would deprive the provisions governing the use of IPCs, namely [OSCURATO:PERSONA] 70(3) of [OSCURATO:PERSONA] 806/2014, [OSCURATO:PERSONA] 103(3) of [OSCURATO:PERSONA] 2014/59 and [OSCURATO:PERSONA] 10(3) of [OSCURATO:PERSONA] 2014/49, of their effectiveness. In particular, according to them, in view of the option offered by the IFRS to treat IPCs as off-balance-sheet items, the EU legislature accepted that credit institutions may fulfil their obligation to provide ex ante funding to resolution funds and DGSs by using those IPCs. In so doing, it intended to preserve the ability of those institutions to finance the real economy. Accordingly, by holding that IPC risks may continue to exist and fall within the scope of prudential supervision by the ECB, the judgment under appeal threatens the balance established by the EU legislature between, on the one hand, the financing of the resolution funds and the DGSs and, on the other, the financing of the real economy by the credit institutions. 100 The question of the effectiveness of the provisions referred to in the preceding paragraph therefore concerns the relationship between the rules establishing resolution funds and DGSs, and authorising the use of IPCs as a contribution to the financing thereof, and Articles 4 and 16 of [OSCURATO:PERSONA] 1024/2013. 101 [OSCURATO:PERSONA], [OSCURATO:PERSONA] 70(3) of [OSCURATO:PERSONA] 806/2014, [OSCURATO:PERSONA] 103(3) of [OSCURATO:PERSONA] 2014/59 and [OSCURATO:PERSONA] 10(3) of [OSCURATO:PERSONA] 2014/49 do not deal with or intended to regulate the issue of accounting and prudential treatment of IPCs. In that context, first, the appellants fail to demonstrate how the possibility, provided for by the EU legislature, for resolution funds and DGSs to be financed through the use of IPCs would have the effect of removing any risks arising from the accounting treatment of IPCs from the prudential supervision carried out by the ECB. Second, the appellants also fail to demonstrate how the confirmation that those risks fall within the scope of prudential supervision by the ECB would jeopardise the balance which the EU legislature struck between the financing of resolution funds and DGSs and the financing of the real economy. In that regard, it should be noted that the financing of the real economy by credit institutions is to be carried out in compliance with the requirements arising from the ‘first pillar’ as well as from the ‘second pillar’ and therefore, contrary to what might be inferred from the appellants’ claims, must not take place without complying with those requirements. 102 That line of argument must, therefore, be rejected as unfounded. 103 The same is true of the appellants’ arguments based on an alleged breach of the principle of legal certainty. 104 In that regard, and more particularly as regards whether, as the appellants submit, the [OSCURATO:PERSONA] interpretation of [OSCURATO:PERSONA] 16(2)(d) of [OSCURATO:PERSONA] 1024/2013 has the effect of imposing on them IPC requirements without a sufficiently clear and precise legal basis, which entails a breach of that principle, it must be borne in mind that that principle, which is one of the general principles of EU law, requires that legal rules be clear, precise and foreseeable in their effects, so that interested parties can ascertain their position in situations and legal relationships governed by EU law (see, to that effect, judgment of 15 September 2005, Ireland v [OSCURATO:PERSONA] , C‑199/03, EU:C:2005:548, paragraph 69 and the case-law cited). 105 Nevertheless, those requirements cannot be interpreted as precluding the EU legislature from having recourse, in a norm that it adopts, to an abstract legal concept, nor as requiring that such an abstract norm refer to the various specific situation in which it may apply, given that all those situations could not be determined in advance by the legislature (see, by analogy, judgment of 20 July 2017, [OSCURATO:PERSONA] and Others , C‑206/16, EU:C:2017:572, paragraphs 39 and 42). 106 Similarly, the fact that an EU act confers a discretion on the authorities responsible for implementing it is not in itself inconsistent with the requirement of foreseeability, provided that the scope of the discretion and the manner of its exercise are indicated with sufficient clarity, having regard to the legitimate aim in question, to give adequate protection against arbitrary interference (see, to that effect, judgment of 16 February 2022, Poland v [OSCURATO:PERSONA] and [OSCURATO:PERSONA] , C‑157/21, EU:C:2022:98, paragraph 321 and the case-law cited). 107 In the present case, having regard to the wording of [OSCURATO:PERSONA] 1024/2013, its context and the objectives it pursues, as examined in paragraphs 80 to 91 above, it is sufficient to note that [OSCURATO:PERSONA] 16(2)(d) of that regulation, read in conjunction with [OSCURATO:PERSONA] 4(1)(f) thereof, is sufficiently clear to enable credit institutions to understand that, in the context of the SREP, the ECB is required to examine whether the arrangements, strategies, processes and mechanisms put in place by such institutions and the own funds held by them ensure a sound management and coverage of the risks to which they are exposed and, on the basis of that individual supervisory review, to impose the necessary measures to remedy the deficiencies identified in that regard. 108 Furthermore, although those provisions grant the ECB a certain margin of discretion, they provide that the exercise by the ECB of the supervisory powers conferred on it is subject to the prior completion of case-by-case assessments and analyses, for which a statement of reasons amenable to judicial review must be given, with the result that that exercise is governed by a framework that is sufficiently clear and precise to prevent any risk of arbitrariness. 109 In the light of the foregoing, the [OSCURATO:PERSONA] was fully entitled to hold, in paragraphs 42 to 44 and 46 of the judgment under appeal, that the ECB, in the context of its supervisory tasks, in particular those which it carries out under [OSCURATO:PERSONA] 4(1)(f) of [OSCURATO:PERSONA] 1024/2013, could impose corrective measures such as a deduction intended to address the risk of overstatement of CET 1 capital, as identified in the present case. 110 As regards the third part of the first ground of appeal, it is sufficient to note that, contrary to what the appellants claim, the [OSCURATO:PERSONA] was fully entitled, in paragraphs 53 to 56 of the judgment under appeal, to find that the ECB had the power to impose on them a reporting requirement provided that an examination of their individual situation had first been carried out, without such a power amending or modifying the reporting requirement laid down in [OSCURATO:PERSONA] 430 of [OSCURATO:PERSONA] 575/2013. [OSCURATO:PERSONA] 16(2)(j) of [OSCURATO:PERSONA] 1024/2013 expressly authorises the ECB to impose additional or more frequent reporting requirements, including reporting on capital and liquidity positions. 111 The fact that the information required, in order to ensure the implementation of the deduction measure, had to be provided by means of the template provided for in Annex I to [OSCURATO:PERSONA] 2021/451, even though the wording of Instruction 1.1.1.28 of that implementing regulation and relating to Row 0529 of that template does not expressly refer to the obligation to declare a CET 1 deduction resulting from a deduction measure, such as that imposed on the appellants by the ECB, cannot lead to the conclusion that the ECB exceeded its powers, or, for the same reasons as those set out in paragraphs 107 to 109 above, that it acted in breach of the principle of legal certainty. 112 It follows that the first ground of appeal must be rejected as unfounded. The second ground of appeal, alleging infringement of [OSCURATO:PERSONA] 16 (1)(c) of [OSCURATO:PERSONA] 1024/2013 Arguments of the parties 113 By the second ground of appeal, divided into two parts, the appellants submit that the [OSCURATO:PERSONA] erred in law in paragraphs 46, 63, 75 and 88 of the judgment under appeal by holding, first, that the risk of overstatement of CET 1 capital is a risk within the meaning of [OSCURATO:PERSONA] 16(1)(c) of [OSCURATO:PERSONA] 1024/2013, and, second, that the ECB had carried out an examination of the appellants’ individual situation by properly taking into account the relevant factors, as set out in [OSCURATO:PERSONA] 4(1)(f) and [OSCURATO:PERSONA] 16(1)(c) of [OSCURATO:PERSONA] 1024/2013. 114 In the first place, the appellants claim that the very concept of risk of overstatement of CET 1 capital, for the purposes of [OSCURATO:PERSONA] 16(1)(c) of [OSCURATO:PERSONA] 1024/2013, is incorrect, in so far as the question whether CET 1 capital was correctly determined falls exclusively within the exhaustive rules set out in Articles 26 to 50 of [OSCURATO:PERSONA] 575/2013. 115 In the second place, the appellants submit that the risk of overstatement of CET 1 capital cannot be classified as a ‘risk’ within the meaning of [OSCURATO:PERSONA] 16(1)(c) of [OSCURATO:PERSONA] 1024/2013, in so far as all three items referred to in that provision, namely arrangements, own funds and liquidity, constitute predetermined legal facts that cannot, as such, be the reference point of a risk. 116 In the third place, the appellants claim that the [OSCURATO:PERSONA] also misconstrued [OSCURATO:PERSONA] 16(1)(c) of [OSCURATO:PERSONA] 1024/2013 by not properly taking into account the systematic relationship between that provision and [OSCURATO:PERSONA] 16(1)(a) and (b) of that regulation. They submit that that joint interpretation confirms that a credit institution’s own funds cannot constitute the reference point of the risk referred to in [OSCURATO:PERSONA] 16(1)(c) of that regulation. In other words, the question whether the CET 1 capital of a credit institution has been correctly declared is a matter of compliance with the requirements of [OSCURATO:PERSONA] 575/2013. They argue that an infringement of those requirements would confer on the ECB the powers to act under [OSCURATO:PERSONA] 16(1)(a) and (b) as well as [OSCURATO:PERSONA] 16(2) of [OSCURATO:PERSONA] 1024/2013, in particular in order to require such an institution to present a plan to restore compliance. By contrast, such an infringement would not fall within the powers conferred on the ECB under [OSCURATO:PERSONA] 16(1)(c) and (2) of that regulation. 117 In the fourth place, the appellants submit that the alleged risk described by the [OSCURATO:PERSONA] in paragraph 46 of the judgment under appeal is by no means an individual risk that depends on and can differ in consideration of the individual circumstances and situation of any credit institution and may be addressed individually by a measure adopted pursuant to [OSCURATO:PERSONA] 16(1)(c) and (2) of [OSCURATO:PERSONA] 1024/2013. It is rather a general function and feature of IPCs and the collateral indissociable from them, which would need to be addressed by the EU legislature by way of a general provision for deduction pursuant to [OSCURATO:PERSONA] 36 et seq. of [OSCURATO:PERSONA] 575/2013. 118 In the fifth place, the appellants submit that the [OSCURATO:PERSONA] merely reproduced the information they had provided to the ECB on the basis of the questionnaire implemented following the 2020 judgments, without assessing whether that information included all the relevant elements necessary to assess the risk of overstatement of CET 1 capital. More specifically, they argue that the [OSCURATO:PERSONA] wrongly concluded that the ECB had duly taken into consideration all the relevant factors in the context of the assessment provided for in [OSCURATO:PERSONA] 16(1)(c) of [OSCURATO:PERSONA] 1024/2013, when the ECB had merely requested information relating to the appellants’ arrangements existing only at the date of the investigations that had been carried out in 2021 and in 2022, without taking into account the measures that the appellants could have put in place to manage the risk of overstatement in question, in order to make a full deduction from CET 1 capital. In addition, according to the appellants, the [OSCURATO:PERSONA] did no more than carry out a formal review of the decision of 21 December 2022, without calling into question the arguments put forward by the ECB, which do not satisfy the requirement of a genuine individual examination, laid down in that provision. 119 As a preliminary point, the ECB contends that the second ground of appeal is inadmissible, in so far as both parts relate to the [OSCURATO:PERSONA] appraisal of the facts. 120 In any event, the ECB submits that the second ground of appeal is unfounded. 121 In their reply, the appellants argue that the second ground of appeal concerns questions of law, namely those relating to the scope of the [OSCURATO:PERSONA] judicial review of the SREP decisions and the legal characterisation of the facts by the [OSCURATO:PERSONA]. Findings of the [OSCURATO:PERSONA] – Admissibility 122 In accordance with settled case-law, where the [OSCURATO:PERSONA] has found or appraised the facts, the [OSCURATO:PERSONA] of Justice has jurisdiction to carry out a review, provided that the [OSCURATO:PERSONA] has defined their legal nature and determined the legal consequences. The jurisdiction of the [OSCURATO:PERSONA] of Justice to review extends, inter alia, to the question whether the [OSCURATO:PERSONA] has taken the right legal criteria as the basis for its appraisal of the facts (judgment of 25 January 2022, [OSCURATO:PERSONA] v [OSCURATO:PERSONA] and Others , C‑638/19 P, EU:C:2022:50, paragraph 72). 123 In the present case, the ECB takes the view that the appellants are asking the [OSCURATO:PERSONA], by the arguments which they put forward in support of the second ground of appeal, to review the appraisal of the facts carried out by the [OSCURATO:PERSONA], which served as the basis for the finding that the decision of 21 December 2022 is lawful, on the ground, in essence, that, first, the risk of overstatement of CET 1 capital constituted a risk, within the meaning of [OSCURATO:PERSONA] 16(1)(c) of [OSCURATO:PERSONA] 1024/2013, and that, second, the ECB had in fact identified a prudential risk specific to the appellants, after examining their individual situation, in accordance with that provision. 124 In those circumstances, it should be noted that, by their arguments, the appellants seek to call into question not the appraisal of the facts, but rather their legal characterisation by the [OSCURATO:PERSONA] and the legal consequences which the [OSCURATO:PERSONA] drew from them, namely that the decision of 21 December 2022 was lawful, in so far as that decision is based on a correct identification of a prudential risk specific to the appellants’ individual situation. 125 In so doing, the appellants raise a point of law by which they challenge the validity of the legal solution adopted by the [OSCURATO:PERSONA] in the judgment under appeal. 126 It follows that, in accordance with the case-law cited in paragraph 122 above, the second ground of appeal is admissible. – Substance 127 [OSCURATO:PERSONA], it should be noted that, in the context of the assessment of the ECB’s examination of the appellants’ individual situation, the [OSCURATO:PERSONA] confirmed, in paragraph 63 of the judgment under appeal, the finding made in paragraphs 42 and 46 of that judgment that the risk identified by the ECB was that of overstatement of CET 1 capital and that the aim of the deduction measure was to address that risk, not the risks of the IPCs potentially being called. 128 In that regard, in the light of the considerations set out in paragraphs 80 to 94 above, it is necessary, for the same reasons, to reject as unfounded the appellants’ arguments alleging that the [OSCURATO:PERSONA] erred in law by failing to find that the very idea of a risk of overstatement of CET 1 capital, for the purposes of [OSCURATO:PERSONA] 16(1)(c) of [OSCURATO:PERSONA] 1024/2013, was vitiated at the outset since the determination of CET 1 capital depends solely on the exhaustive rules laid down in Articles 26 to 50 of [OSCURATO:PERSONA] 575/2013. 129 The same is true of the other two arguments put forward by the appellants, namely that the risk of overstatement of CET 1 capital cannot be classified as a ‘risk’ within the meaning of [OSCURATO:PERSONA] 16(1)(c) of [OSCURATO:PERSONA] 1024/2013, since all three items referred to in that provision, namely arrangements, own funds and liquidity, constitute predetermined legal facts that cannot, as such, be the reference point of a risk, and the argument that a joint interpretation of points (a) to (c) of [OSCURATO:PERSONA] 16(1) of [OSCURATO:PERSONA] 1024/2013 confirms that an infringement of [OSCURATO:PERSONA] 575/2013 would confer on the ECB only the powers to act under points (a) and (b) of [OSCURATO:PERSONA] 16(1), and [OSCURATO:PERSONA] 16(2), of [OSCURATO:PERSONA] 1024/2013, in particular in order to require, under point (c) of [OSCURATO:PERSONA] 16(1) of that regulation, the credit institution to present a plan to restore compliance. In that regard, it should also be noted that the appellants do not specify in a sufficiently clear manner on the basis of which criteria the measure consisting of a plan to restore compliance under [OSCURATO:PERSONA] 16(1)(c) of that regulation is the only measure, among those listed in [OSCURATO:PERSONA] 16(2) thereof, which the EU legislature intended to reserve for situations of non-compliance with prudential requirements. 130 Second, the appellants’ line of argument alleging misapplication of [OSCURATO:PERSONA] 16(1)(c) of [OSCURATO:PERSONA] 1024/2013, on the ground that the [OSCURATO:PERSONA] held, in paragraphs 75 and 88 of the judgment under appeal, that the ECB had carried out an individual examination in accordance with that provision, on the basis of an overall assessment of all the relevant factors, must be rejected as unfounded. 131 As has been pointed out in paragraph 84 above, the [OSCURATO:PERSONA] recognises that the ECB has a certain discretion when it adopts measures relating to prudential supervision (see, to that effect, judgment of 8 May 2019, [OSCURATO:PERSONA]Württemberg v ECB , C‑450/17 P, EU:C:2019:372, paragraph 86). 132 [OSCURATO:PERSONA], where an EU institution has a certain margin of discretion, the exercise of that discretion, according to settled case-law, does not escape judicial review (see, to that effect, judgment of 15 February 2005, [OSCURATO:PERSONA] v [OSCURATO:PERSONA] , C‑12/03 P, EU:C:2005:87, paragraph 39). 133 In particular, as the [OSCURATO:PERSONA] rightly recalled in paragraphs 59 to 61 of the judgment under appeal, if the competent institution has a discretion, the judicial review which the Courts of the [OSCURATO:PERSONA] must carry out of the merits of the grounds of a decision such as the decision of 21 December 2022 must not lead them to substitute their assessment for that of the ECB, but seeks to ascertain that that decision is not based on materially incorrect facts and is not vitiated by a manifest error of assessment or misuse of powers (see, to that effect, judgment of 4 May 2023, ECB v Crédit lyonnais , C‑389/21 P, EU:C:2023:368, paragraph 55 and the case-law cited). 134 It is settled case-law that the Courts of the [OSCURATO:PERSONA] must, inter alia, establish not only whether the evidence relied on is factually accurate, reliable and consistent but also whether that evidence contains all the relevant information which must be taken into account in order to assess a complex situation and whether it is capable of substantiating the conclusions drawn from it (judgment of 4 May 2023, ECB v Crédit lyonnais , C‑389/21 P, EU:C:2023:368, paragraph 56 and the case-law cited). 135 Where an institution enjoys a certain discretion, observance of procedural guarantees is of fundamental importance, including the obligation for that institution to examine carefully and impartially all the relevant aspects of the situation in question (see, to that effect, judgment of 4 May 2023, ECB v Crédit lyonnais , C‑389/21 P, EU:C:2023:368, paragraph 57 and the case-law cited). 136 In the present case, in order to rule on the ECB’s examination of the appellants’ situation, the [OSCURATO:PERSONA], first of all, again pointed out, in paragraphs 63 and 64 of the judgment under appeal, that the risk of overstatement of CET 1 capital resulted from the unavailability of the sums paid as collateral for the IPCs given by the appellants, and that the existence of such a risk had already been recognised by the [OSCURATO:PERSONA] in the 2020 judgments. 137 Next, in paragraphs 65 to 67 of the judgment under appeal, the [OSCURATO:PERSONA], first, set out the ECB’s methodology following the annulment of the decisions referred to in the cases which gave rise to the 2020 judgments, in order to carry out a more specific examination of the situation of credit institutions giving IPCs, and, second, found that the main source of information necessary to identify any risk of overstatement of CET 1 capital came from the replies to a questionnaire sent individually by the ECB to all credit institutions giving IPCs, and from the request for specific additional information sent to the appellants. In paragraphs 69 to 76 of the judgment under appeal, the [OSCURATO:PERSONA] also took into account the two-step analysis carried out by the ECB concerning own funds and the analysis of the appellants’ liquidity and the arrangements, strategies, processes and mechanisms implemented by them, and found that those analyses were relevant and that they complied with the requirements of [OSCURATO:PERSONA] 4(1)(f) and [OSCURATO:PERSONA] 16(1)(c) of [OSCURATO:PERSONA] 1024/2013. 138 In addition, as regards, more specifically, the argument that the ECB established a general rule for accounting treatments identical to that carried out by the appellants, the [OSCURATO:PERSONA] found, in paragraph 80 of the judgment under appeal, that, given that the accounting treatment of IPCs is specific to each credit institution and that the applicable accounting rules leave in that regard a certain margin of discretion, or even a choice, to the appellants, the imposition of the deduction measure on several credit institutions giving IPCs cannot be treated as the creation, by the ECB, of a rule of general application. 139 To that end, it listed in paragraphs 82 to 84 of the judgment under appeal the various options for the accounting treatment of IPCs and the collateral inextricably linked to them, noting that the SREP decisions which the ECB had produced following a measure of organisation of procedure showed that the examination of the individual situation of the various credit institutions giving IPCs had led the ECB to different conclusions. 140 Last, in paragraphs 85 to 88 of the judgment under appeal, the [OSCURATO:PERSONA] rejected the complaint relating to the failure to carry out an individual examination, having assessed and verified the accuracy of the arguments put forward in the present case by the ECB concerning the basis of the accounting treatment of the IPCs chosen by the appellants. 141 In that regard, it is also necessary to note the [OSCURATO:PERSONA] findings, in paragraph 97 of the judgment under appeal, that, since [OSCURATO:PERSONA] 16(1)(c) of [OSCURATO:PERSONA] 1024/2013 requires the ECB to carry out an individual examination in order to determine whether the arrangements, strategies, processes and mechanisms implemented by the credit institution and the own funds and liquidity held by it ensure a sound management and adequate coverage of its risks, the ECB is to assess a real situation and not a hypothetical one. 142 Consequently, it must be held that the [OSCURATO:PERSONA] carried out its review in accordance with the case-law of the [OSCURATO:PERSONA] of Justice referred to in paragraphs 133 to 135 above, by verifying whether the evidence relied on by the ECB was factually accurate, reliable and consistent, whether it included all the relevant information which must be taken into account in order to assess a complex situation and whether it was capable of substantiating the conclusions drawn from it in the present case. 143 Third, in the light of the considerations set out in paragraphs 136 to 141 above, similarly, the appellants’ line of argument that the alleged risk of overstatement of CET 1 capital is by no means an individual risk that depends on and can differ in consideration of the individual circumstances and situation of any institution, and may be addressed individually by a measure adopted pursuant to [OSCURATO:PERSONA] 16(1)(c) and (2) of [OSCURATO:PERSONA] 1024/2013, must be rejected as unfounded. 144 It follows that the second ground of appeal must be rejected as unfounded and, consequently, the present appeal must be dismissed in its entirety. Costs 145 [OSCURATO:PERSONA] 184(2) of the Rules of Procedure of the [OSCURATO:PERSONA] of Justice, where an appeal is unfounded, the [OSCURATO:PERSONA] is to make a decision as to the costs. 146 [OSCURATO:PERSONA] 138(1) of those rules, applicable to the procedure on an appeal by virtue of [OSCURATO:PERSONA] 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. 147 Since the ECB has applied for costs and the appellants have been unsuccessful, the latter should be ordered to bear their own costs and to pay those incurred by the ECB. On those grounds, the [OSCURATO:PERSONA] ([OSCURATO:PERSONA]) hereby: 1. Dismisses the appeal; 2. [OSCURATO:PERSONA] AG and BHW Bausparkasse AG to bear their own costs and to pay those incurred by the [OSCURATO:PERSONA]. [OSCURATO:PERSONA] in open court in Luxembourg on 29 January 2026. A. [OSCURATO:PERSONA] M. [OSCURATO:PERSONA] of the [OSCURATO:PERSONA] * Language of the case: English.