The rule in plain words
Own funds and eligibile liabilities governed by third country law cannot be less than containing a write down and conversion clause as referred to in Article 55 of Directive 2014/59/EU.
EBA checks it for two columns: minimum requirement for own funds and eligible liabilities (MREL), and requirement for own funds and eligible liabilities for G-SIIs (TLAC). That makes two checks. A failure names the one that failed.
How the Line4 Check report words itShowHide
The first of its checks, word for word as the report shows it when it fails. The others read the same, with their own column, row or sheet.
Requirement for own funds and eligible liabilities for G-SIIs (TLAC): Of which governed by third country law >= Of which containing a write down and conversion clause as referred to in Article 55 of Directive 2014/59/EU
What to do if your filing fails it
- 01Open the template below and find the cells the rule reads.
- 02Compare the values in your file. If the first is smaller than it may be, one of them is wrong: check both before you change either.
- 03EBA allows a small rounding difference, worked out from the decimals each value is reported with.
- 04It runs only when your filing indicators mark M 01.00 as reported.
- 05This 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
MREL and TLAC key metrics (resolution groups / entities) (KM2) (M 01.00)
Rows
- 0220Of which governed by third country law
- 0230Of which containing a write down and conversion clause as referred to in Article 55 of Directive 2014/59/EU
Columns
- 0010Minimum requirement for own funds and eligible liabilities (MREL)
- 0020Requirement for own funds and eligible liabilities for G-SIIs (TLAC)
A worked example
The first of its checks, with simple numbers.
Containing a write down and conversion clause as referred to in Article 55 of Directive 2014/59/EU can then be at most 1,200.
A file that reports 1,200 passes. One that reports 1,300 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, as written out for the first of its checks. Cells are written as {template, row, column, sheet}.
{M_01.00,r0220,c0020,} >= {M_01.00,r0230,c0020,}The next one:
{M_01.00,r0220,c0010,} >= {M_01.00,r0230,c0010,}Other rules on M 01.00
- Other bailinable liabilities cannot be less than other bailinable liabilities governed by third country law (v10740_m)Warning
- Own funds and eligibile liabilities cannot be less than own funds and eligibile liabilities governed by third country law (v10737_m)Warning
- Own funds and eligibile liabilities cannot be less than own funds and subordinated liabilities (v10736_m)Warning
- Other bailinable liabilities governed by third country law cannot be less than containing a write down and conversion clause (v10742_m)Warning
- Other bailinable liabilities must equal the sum of its three parts (v10743_m)Warning
- Own funds and eligible liabilities as a percentage of the total risk exposure amount cannot be less than own funds and subordinated liabilities (v10744_m)Warning
- Own funds and eligible liabilities as a percentage of the total exposure measure cannot be less than own funds and subordinated liabilities (v10745_m)Warning
- Own funds and eligibile liabilities cannot be less than aggregate amount of permitted non-subordinated eligible liabilities instruments if the subordination discretion as per Article 72b(3) of Reg (v10746_m)Warning
Every MREL and TLAC rule, by template
Checks like this one, run at the point of submission, are the first step to real-time supervision.