Question ID
2015_2218
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Supervisory reporting - FINREP (incl. FB&NPE)
Article
99
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (repealed)
Article/Paragraph
Annexes III, IV and V
Type of submitter
Credit institution
Subject matter
FINREP, F 31.02 vs F 02.00 – dividend income from joint ventures and associates
Question

Could you clarify the inconsistency between the references of template F 31.02 (IAS24) and the instructions and deactivate the validation rule v1374_m, or if not, clarify the reasons of this one?

Background on the question

The validation rule v1374_m specifies that dividends from joint ventures and associates must be lower than the sum mentioned in F 02.00 (sum ({F 31.02, r030, (c010-050)}) <= {F 02.00, r160, c010}).

In the case of the dividends, the entity cannot have a not eliminated amount since they are specific intra-group transactions which have an impact on the equity and are completely eliminated by the application of the method of consolidation.

Consequently, if the institution applies Annex V, Part 2, paragraph 120, the amount of dividends to be indicated in cell {r030, c030} is always null. However the template refers to IAS 24.18 which specifies the detail of the required disclosures, namely, the amount of the transactions with the related parties. And it seems more relevant to provide the global amount as requested by IAS 24 rather than the not eliminated amount as indicated in the paragraph 120. Indeed, the global amount enables to appreciate the effects of the related party relationships on an entity.

Submission date
Final publishing date
Final answer

Row 030 of template F 31.02 of Annexes III and IV to Regulation (EU) No 680/2014 (ITS on Supervisory Reporting) requires the reporting of dividend income received from related parties that are not fully or partially consolidated or accounted for using the equity method.. In the other cases, the share of the total dividend income paid by the related party and belonging to the reporting entity shall be eliminated as an intragroup transaction.

In template F 02.00 of Annexes III and IV to the ITS on Supervisory Reporting, dividend income from subsidiaries, associates and joint ventures which are not fully consolidated under the regulatory scope of consolidation shall be reported in row 160, whereas dividends distributed by subsidiaries, associates and joint ventures accounted for under the equity method in accordance with the regulatory consolidation rules defined in Article 18 of Regulation (EU) No 575/2013 (CRR) reduce the carrying amount of the investment in these entities according to IAS 28.10.

Annex V is envisaged to be amended accordingly in v2.7 of the reporting framework (see EBA final draft ITS EBA/ITS/2016/075), clarifying in Part 2, paragraph 42 that in the new row 192 of F 02.00 (dividend income from investments in subsidiaries, joint ventures and associates) dividends of these investments shall be included, where they are accounted for using methods other than the equity method.

Annex V, Part 2, paragraph 54 as amended by EBA/ITS/2016/075 will clarify that the share of profit or loss from subsidiaries, associates and joint ventures which are accounted for under the equity method in the regulatory scope of consolidation shall be reported within “Share of the profit or (-) loss of investments in subsidiaries, joint ventures and associates accounted for using the equity method” (row 590 of F02.00). According to IAS 28.10, the carrying amount of investments in subsidiaries, joint ventures and associates accounted for using the equity method shall be reduced by the amount of dividends paid by those entities (row 260 of F 01.01). These entities’ dividends are consequently not reported in F 02.00 (neither under currently applicable nor the planned, revised version of the ITS on Supervisory Reporting) and also in F 31.02. Consequently, validation rule v1374_m is correct.

As an aside, cell {r030, c030} of template F 31.02 may very well present values other than zero, as it includes dividends from associates and joint ventures for which neither full nor proportional consolidation nor the equity method is applied.

Status
Final Q&A
Answer prepared by
Answer prepared by the EBA.

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