Question ID
2018_4336
Legal act
Directive 2013/36/EU (CRD)
Topic
Supervisory reporting - FINREP (incl. FB&NPE)
Article
na
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
na
Type of submitter
Credit institution
Subject matter
FINREP Locom valued debt instruments: Reporting of "Accumulated negative value adjustments on LOCOM assets - credit risk induced"
Question

Could it be that the following validation rules 5319_m until v5331_m are not correct for LOCOM valuated debt instruments. Should  "Accumulated negative value adjustments on LOCOM assets - credit risk induced"  be reported under accumalated impairment and not under "Accumulated negative changes in fair value due to credit risk on non-performing exposures"?

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".

Submission date
Final publishing date
Final 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
Answer prepared by
Answer prepared by the EBA.

Disclaimer

The Q&A refers to the provisions in force on the day of their publication. The EBA does not systematically review published Q&As following the amendment of legislative acts. Users of the Q&A tool should therefore check the date of publication of the Q&A and whether the provisions referred to in the answer remain the same.