The rule in plain words
Total allowance for debt instruments must equal these three added up:
- Allowances for financial assets without increase in credit risk since initial recognition (Stage 1)
- Allowances for debt instruments with significant increase in credit risk since initial recognition but not credit-impaired (Stage 2)
- Allowances for credit-impaired debt instruments (Stage 3)
All the values are in the increases due to origination and acquisition column (0020) of F 12.01.a.
How the Line4 Check report words itShowHide
Word for word as the report shows it when the rule fails.
Increases due to origination and acquisition: Total allowance for debt instruments = Allowances for financial assets without increase in credit risk since initial recognition (Stage 1) + Allowances for debt instruments with significant increase in credit risk since initial recognition but not credit-impaired (Stage 2) + Allowances for credit-impaired debt instruments (Stage 3)
What to do if your filing fails it
- 01Open the template below and find the cells the rule reads.
- 02Add up the parts in your file and compare the result with the total.
- 03If they differ, a part is missing, a value sits in the wrong row, or the total is out of date.
- 04EBA allows a small rounding difference, worked out from the decimals each value is reported with.
- 05It runs only when your filing indicators mark F 12.01 as reported.
- 06This is a warning. It does not stop the filing on its own, but your authority may ask you to explain it.
The cells it reads
Movements in allowances and provisions for credit losses (I) (F 12.01.a)
Rows
- 0010Allowances for financial assets without increase in credit risk since initial recognition (Stage 1)
- 0180Allowances for debt instruments with significant increase in credit risk since initial recognition but not credit-impaired (Stage 2)
- 0360Allowances for credit-impaired debt instruments (Stage 3)
- 0520Total allowance for debt instruments
Column
- 0020Increases due to origination and acquisition
A worked example
The first of its checks, with simple numbers.
Total allowance for debt instruments must then be 2,450.
A file that reports 2,450 passes. One that reports 2,550 fails, by 100.
The numbers are illustrative, reported to the unit, so the rounding tolerance does not change the result.
Show the rule as writtenShowHide
EBA's formula. Cells are written as {template, row, column, sheet}.
{F_12.01.a,r0520,c0020,} = {F_12.01.a,r0010,c0020,} + {F_12.01.a,r0180,c0020,} + {F_12.01.a,r0360,c0020,}Other rules on F 12.01.a
- Closing balance must equal the sum of its seven parts (v09605_m)Warning
- Allowances for purchased or originated credit-impaired financial assets: debt securities must equal the sum of its five parts (v09602_m)Warning
- Allowances for purchased or originated credit-impaired financial assets must equal the sum of its two parts (row 0600, v09606_m)Warning
- Allowances for credit-impaired debt instruments (Stage 3): loans and advances must equal the sum of its six parts (v8134_m)Warning
- Allowances for credit-impaired debt instruments (Stage 3): debt securities must equal the sum of its five parts (v8133_m)Warning
- Allowances for credit-impaired debt instruments (Stage 3) must equal the sum of its two parts (row 0360, v5056_m)Blocking
- Allowances for debt instruments with significant increase in credit risk since initial recognition but not credit-impaired (Stage 2) must equal the sum of its two parts (row 0180, v5055_m)Blocking
- Allowances for financial assets without increase in credit risk since initial recognition (Stage 1) must equal the sum of its two parts (row 0010, v5054_m)Blocking
Every FINREP 9 rule, by template
Checks like this one, run at the point of submission, are the first step to real-time supervision.