The rule in plain words
Amount cannot be more than zero.
EBA checks it for 15 rows, from (-)Total deductions (0050) to (-)Expenses related to items that have already been deducted from own funds (0190). That makes 15 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.
(-)Employees', directors' and partners' shares in net profits <= 0
What to do if your filing fails it
- 01Open the template below and find the cells the rule reads.
- 02Look for a value with the wrong sign in these cells, such as an amount entered as a negative number.
- 03EBA compares the values exactly here: there is no rounding tolerance.
- 04It runs only when your filing indicators mark I 03.00 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
Fixed overheads requirements calculation (I 03.00)
Rows
- 0050(-)Total deductions
- 0060(-)Staff bonuses and other remuneration
- 0070(-)Employees', directors' and partners' shares in net profits
- 0080(-)Other discretionary payments of profits and variable remuneration
- 0090(-)Shared commission and fees payable
- 0100(-)Fees, brokerage and other charges paid to CCPs that are charged to customers
- 0110(-)Fees to tied agents
- 0120(-)Interest paid to customers on client money where this is at the firm's discretion
- 0130(-)Non-recurring expenses from non-ordinary activities
- 0140(-)Expenditures from taxes
- 0150(-)Losses from trading on own account in financial instruments
- 0160(-)Contract based profit and loss transfer agreements
- 0170(-)Expenditure on raw materials
- 0180(-)Payments into a fund for general banking risk
- 0190(-)Expenses related to items that have already been deducted from own funds
Column
- 0010Amount
A worked example
The first of its checks, with simple numbers.
(-)Employees', directors' and partners' shares in net profits can then be at most 0.
A file that reports 0 passes. One that reports 100 fails, by 100.
The numbers are illustrative.
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}.
{I_03.00,r0070,c0010,} <= 0The next five:
{I_03.00,r0120,c0010,} <= 0{I_03.00,r0050,c0010,} <= 0{I_03.00,r0150,c0010,} <= 0{I_03.00,r0100,c0010,} <= 0{I_03.00,r0170,c0010,} <= 0And 9 more, the same formula for the other cells it covers.
Other rules on I 03.00
- Amount cannot be negative (v10990_s)Warning
- Liquidity requirement cannot be less than fixed overhead requirement times 1 divided by 3 (v11140_m)Warning
- Fixed expenses incurred on behalf of the investment firms by third parties cannot be more than total expenses of the previous year after distribution of profits (v11144_m)Warning
Every IFR class 2 rule, by template
Checks like this one, run at the point of submission, are the first step to real-time supervision.