In template C5.01 validation rule v3689_s states that R010 C040 cannot be negative, should R010 C040 be excluded from this validation rule?
Row 440, Column 040 asks for adjustments due to IFRS 9 transitional arrangements included in RWAs and is a negative figure. The correct logic for the template would be to also insert this figure into: a. R010 ‘TOTAL ADJUSTMENTS’ : C040 ‘Adjustments included in RWAs b. R100 ‘OTHER TRANSITIONAL ADJUSTMENTS’ : C040 ‘Adjustments included in RWAs’ The adjustments due to IFRS 9 transitional arrangements included in RWAs in Row 440 Column 040 relates to Article 7(a) and 7(b) of EU Regulation 2017/2395, adjustments to RWAs due to not taking into account the effects of credit loss provisions included in the transitional CET1 add back on deferred tax assets and specific credit risk adjustments on standardised exposures.
Article 1.7 of Regulation (EU) 2017/2395 refers to the IFRS 9 transitional arrangements ‘by not taking into account the effects of the expected credit loss provision in CET1’. The adjustment of the RWA as reporting in column 040 of template C 05.01 of Annex I to Regulation (EU) No 680/2014 (ITS on Supervisory Reporting) is consequently necessarily a positive amount.
Hence, validation rule v3689_s is correct.