Ruling [ECJ] ¦ Judicial Oversight Reinforced: Supervisory Communications Not Immune

ECB Supervisory Opinion on Deferred Tax Assets: Why a Bank Challenged a Non‑Binding Communication

In March 2026 the General Court dismissed the European Central Bank’s objection that BANK 1’s annulment action was inadmissible and allowed the case to proceed on the merits. The dispute concerns a 16 October 2024 email from the ECB’s Joint Supervisory Team (JST) that communicated the ECB’s view on the prudential treatment of Deferred Tax Assets (DTAs) originating in BANK 1’s Brazilian subsidiary and consolidated into the parent’s accounts. The bank asked the Court to annul that communication. The JST had concluded that those DTAs did not meet the conditions in Article 39(2) of the Capital Requirements Regulation (CRR) and therefore had to be deducted from Common Equity Tier 1 (CET1) capital under Articles 36(1)(c), 38 and 48 CRR. The ECB contended the email was purely informational and non‑binding and so not susceptible to judicial review under Article 263 TFEU .

Substantive legal framework

The case is rooted in the CRR rules on prudential capital. Under Article 36(1)(c) CRR, DTAs that depend on future taxable profits must be deducted from CET1. Article 39(2) CRR provides a special, limited treatment for DTAs that do not depend on future profits but were created before 23 November 2016 and arise from temporary differences, subject to conditions and a 100% risk weight. The ECB, exercising supervisory tasks conferred by the SSM Regulation and the Single Supervisory Mechanism (SSM) framework, supervises significant institutions through a joint supervisory team that can issue supervisory communications and operate within informal dialogue channels, as described in the ECB’s Supervisory Manual.

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"The General Court held that the JST email went beyond mere information: it applied the CRR to BANK 1’s facts, stated the ECB’s definitive view that certain DTAs did not meet Article 39(2) conditions, and therefore could affect the bank’s prudential capital position and potential enforcement outcomes. Consequently, the court dismissed the ECB’s inadmissibility objection and allowed the annulment action to proceed.

This ruling confirms that supervisory communications framed as informal may nevertheless be subject to judicial review when their substance produces binding legal effects. Supervisors should be precise about the legal status of their communications, and banks retain the right to seek judicial remedies without having to risk non‑compliance first."

Why the bank challenged the communication

BANK 1 sought judicial review because it considered the JST email to be a definitive, binding determination that the DTAs at issue must be deducted from CET1 – a treatment that materially affects its consolidated prudential capital position. The bank had earlier submitted analyses and external legal opinions to the JST explaining why those DTAs, created under Brazilian law and backed by central government claims, should not be deducted but instead be subject to the special treatment envisaged by Article 39(2). The JST responded with an email that the bank interpreted as imposing a mandatory interpretation and requiring it to change its regulatory capital treatment, with potential supervisory consequences if the bank did not comply.

ECB’s position and supervisory context

The ECB argued the communication was not an act capable of being annulled because it did not impose obligations and did not alter the bank’s legal position: the relevant capital requirements flow directly from the CRR and are binding. The JST email, the ECB said, merely expressed a non‑binding interpretative view within the informal supervisory dialogue set out in the Supervisory Manual. The ECB further noted the JST is not a decision‑making collegiate body with authority to issue final decisions binding the institution; formal, binding measures would follow internal ECB procedures and, if necessary, statutory articles such as Article 16 SSM Regulation, or enforcement under Article 18.

Court’s legal reasoning on admissibility

The General Court applied settled case law that admissibility for an action for annulment depends on whether the contested act produces binding legal effects that appreciably alter the applicant’s legal position. Form must not prevail over substance: the fact that a communication takes the form of an email or is labeled “informal” does not automatically render it beyond judicial review. The Court therefore examined the essence of the JST email, its content, the specific context in which it was sent, and the author’s powers.

The Court found several decisive features. The JST email did more than explain the legal framework: it applied the CRR provisions to the specific facts of BANK 1’s situation, concluded DTAs did not meet Article 39(2) conditions, and stated they must be deducted from CET1. The email was sent in response to a 9 April 2024 submission from the bank that had requested clarification; the ECB treated the submission as a request and replied “As requested” to BANK 1’s representatives. The JST email stated it reflected the ECB’s view and followed consultation with ECB horizontal teams, indicating it conveyed the institution’s position rather than a preliminary or purely informational remark.

Moreover, the Court accepted that the existence of such a communication could influence subsequent supervisory or sanctioning action: if BANK 1 had not adopted the JST view, the ECB could have taken measures under Article 16 or imposed administrative penalties under Article 18 SSM Regulation. The Court also noted the ECB’s own guidance on sanctions considers whether an entity persisted in non‑compliance after being informed by the JST; that means the communication could affect the assessment of whether an infringement was deliberate and thus the severity of any sanction.

Balancing informal dialogue and judicial protection

The Court recognized the value of informal supervisory dialogue for early, effective risk remediation. However, that procedural context does not shield a communication from judicial review where, in substance, it imposes binding legal effects or definitively determines an institution’s obligations. The fundamental right of access to an effective remedy under Article 47 of the Charter requires that entities not be forced to breach EU law to obtain judicial review. Consequently, the Court concluded the bank was entitled to challenge the JST email.

Consequences and practical implications

The General Court dismissed the ECB’s inadmissibility plea and preserved BANK 1’s access to the full proceedings. The Court reserved costs pending final resolution. Practically, the decision confirms that supervisory communications, even if informal in appearance and transmitted by email as part of JST dialogue, may be susceptible to annulment proceedings if their content and context show they produce binding legal effects for the supervised entity. Supervisory authorities should therefore take care to distinguish purely advisory exchanges from communications that, effectively, fix the supervisor’s position on how directly applicable prudential rules apply to a specific institution. Supervised banks, in turn, retain the ability to seek judicial review of supervisory interpretations that materially affect their capital positions without first exposing themselves to sanctions.

Lessons for banks and supervisors

This decision underscores that supervisory transparency and procedural clarity matter. Supervisors should document whether a communication is provisional or definitive and ensure procedural safeguards when a communication is intended to set binding expectations. Banks should preserve and document formal requests for supervisory clarification when seeking positions that could materially affect regulatory capital; clear records that the authority treated a submission as a request, and that the authority’s reply reflected its official view, strengthen the bank’s ability to invoke judicial review where necessary.

Conclusion

The General Court’s ruling on admissibility marks a significant affirmation of judicial oversight over supervisory practice. It clarifies that substance controls form: an ostensibly informal supervisory email can be an act open to annulment if it determines a supervised entity’s legal obligations and can influence subsequent enforcement. The decision emphasizes the need for supervisors to be precise about the legal status of their communications and for banks to use available procedural channels to secure binding clarifications where legal certainty is required.

Dive deeper

• InfoCuria ¦ Case T-610/24 ¦ Link
• ECB ¦ ECB supervisory guides ¦ Link