Single Rulebook Q&A

Question ID: 2018_4336
Legal act : Directive 2013/36/EU as amended by Directive (EU) 2019/878 – CRD5
Topic : Supervisory reporting
Article: na
Paragraph:
Subparagraph:
COM Delegated or Implementing Acts/RTS/ITS/GLs: Not applicable
Article/Paragraph : na
Type of submitter: Credit institution
Subject matter : Finrep Locom valued debt instruments: Could it be that "Accumulated negative value adjustments on LOCOM assets - credit risk induced" should be presented under accumalated impairment and not under "Accumulated negative changes in fair value due to credit risk on non-performing exposures"
Question:

Could it be that the following validation rules 5319_m until v5331_m are not correct for LOCOM valuated debt instruments.

Background on the question:

According to the Finrep guidelines (Annex 5,69, 71), Definition of "Accumulated impairment" is provided. "Under IFRS, accumulated impairment shall include the allowance for expected credit losses for financial assets under each of the impairment stages specified by IFRS 9. Under national GAAP based on BAD, it shall include specific and general allowance for credit risk, as well as the general allowance for banking risk where it reduces the carrying amount of debt instruments. Accumulated impairment shall also include the credit risk-induced value adjustments on financial assets under LOCOM." I interprete that the "Accumulated negative value adjustments on LOCOM assets - credit risk induced" should be represented in the column accumlated impairment and not the column "Accumulated negative changes in fair value due to credit risk on non-performing exposures".

Date of submission: 23/10/2018
Published as Final Q&A: 07/06/2019
EBA answer:

According Part 2, paragraph 71 of Annex V to Regulation (EU) No 680/2014 (ITS on Supervisory Reporting), ”Accumulated impairment shall also include the credit risk-induced value adjustments on financial assets under LOCOM.” Therefore, this element shall be reported in F 20.4 under column 031. Additionally, column 040 will not show any accumulated negative changes in fair value due to credit risk on non-performing LOCOM exposures.

F 18.00 covers “Accumulated impairment, accumulated negative changes in fair value due to credit risk and provisions” whereas in F 20.4 column 040 “Accumulated negative changes in fair value due to credit risk on non-performing exposures” have to be reported.

The data points in the two templates cover potentially different content. Therefore, the validation rule v5319_m and the analogous further rules v5320_m to v5331_m should be deactivated. 

Status: Final Q&A
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