Question ID
2014_1087
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Supervisory reporting - COREP (incl. IP Losses)
Article
26
Paragraph
2
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Regulation (EU) No 183/2014 - RTS for the calculation of specific and general credit risk adjustments
Article/Paragraph
1
Name of institution / submitter
Croatian National Bank
Country of incorporation / residence
Croatia
Type of submitter
Competent authority
Subject matter
Specific credit risk adjustments
Question

Which item in the CA1 report should be used for reporting "immediate reduction in Common Equity Tier 1 capital" as described under Article 1 paragraph 1 second subparagraph of the Commission Delegated Regulation (EU) No 183/2014, in order to reduce the amount of exposure for specific credit risk adjustments for the purposes of calculation of risk-weighted assets?

Background on the question

According to Article 1 paragraph 1 second subparagraph of the Commission Delegated Regulation (EU) No 183/2014, in the event of interim profits or year-end profits that have not been approved in accordance with Article 26(2) of Regulation (EU) No 575/2013, impairments, value adjustments or provisions for off-balance sheet items which have been recognised during the financial year may be included in the calculation of general and specific credit risk adjustments if the respective amounts have been deducted from an institution’s Common Equity Tier 1 capital (CET1), by way of a corresponding immediate reduction in CET1 capital for the determination of own funds. The "immediate reduction of Common Equity Tier 1 capital" described by the Commission Delegated Regulation (EU) No 183/2014 is not one of the items of the CET1 capital or deductions from the CET1 capital (as stated in part two of the CRR).Therefore we want to be sure that it is possible to report this reduction the CA1 template.

Submission date
Final publishing date
Final answer
The reporting of the reductions of CET1 capital according to Article 1 (1) second subparagraph of Commission Delegated Regulation (EU) No 183/2014 depends on the profit situation of the reporting institution. If the impairments, value adjustments or provisions for off-balance sheet items (corresponding to general and specific credit risk adjustments), form part of an overall loss in the current financial year (Article 36 (1) (a) CRR), the amount is already reflected in row 160 of template C 01.00 (Annex II of Regulation (EU) 680/2014 - ITS on reporting). In the specific case of impairments, value adjustments or provisions for off-balance sheet items reflected in interim profits or year-end profits that have not been approved by the competent authority in accordance with Article 26 (2) of the Regulation (EU) No. 575/2013 (CRR), for the general and specific credit risk adjustments to be recognised, a reduction of CET1 shall be reported in C 01.00, row 529 ( "CET1 capital elements or deductions - other") in accordance with the requirements of the second subparagraph of Article 1(1) of Commission Delegated Regulation (EU) No 183/2014.
Status
Final Q&A
Answer prepared by
Answer prepared by the EBA.

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