The rule in plain words
Applicable percentage cannot be negative.
EBA checks it for seven rows: capital instruments and items that do not qualify as minority interests, transitional recognition in consolidated own funds of minority interests, transitional recognition in consolidated own funds of qualifying additional Tier 1 capital, transitional recognition in consolidated own funds of qualifying Tier 2 capital, deferred tax assets that rely on future profitability and do not arise from temporary differences, deferred tax assets that are dependent on future profitability and arise from temporary differences, and additional filters and deductions. That makes seven 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.
Applicable percentage: Transitional recognition in consolidated own funds of qualifying Additional Tier 1 capital >= 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 C 05.01 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
Capital adequacy - transitional provisions: Summary (C 05.01)
Rows
- 0080Capital instruments and items that do not qualify as minority interests
- 0090Transitional recognition in consolidated own funds of minority interests
- 0091Transitional recognition in consolidated own funds of qualifying Additional Tier 1 capital
- 0092Transitional recognition in consolidated own funds of qualifying Tier 2 capital
- 0170Deferred tax assets that rely on future profitability and do not arise from temporary differences
- 0385Deferred tax assets that are dependent on future profitability and arise from temporary differences
- 0430Additional filters and deductions
Column
- 0050Applicable percentage
A worked example
The first of its checks, with simple numbers.
Transitional recognition in consolidated own funds of qualifying additional Tier 1 capital, applicable percentage must then be at least 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}.
{C_05.01,r0091,c0050,} >= 0The next five:
{C_05.01,r0090,c0050,} >= 0{C_05.01,r0092,c0050,} >= 0{C_05.01,r0170,c0050,} >= 0{C_05.01,r0385,c0050,} >= 0{C_05.01,r0430,c0050,} >= 0And 1 more, the same formula for the other cells it covers.
Other rules on C 05.01
- Total adjustments must equal the sum of its three parts (v1630_m)Warning
- Adjustments included in RWAs cannot be negative (v3689_s)Warning
- Adjustments to CET1 cannot be negative (v3690_s)Warning
- Eligible amount without transitional provisions cannot be negative (v3693_s)Warning
- A matching-values check across capital adequacy: transitional provisions: Summary and capital adequacy (C 05.02, row 0060, v0276_m)Warning
- A matching-values check across capital adequacy: transitional provisions: Summary and capital adequacy (C 05.02, row 0060, v0275_m)Warning
- Instruments not constituting state aid, adjustments to CET1 must equal instruments that qualified for Article 57, point (a), total grandfathered amount (v0274_m)Warning
- Deductions must equal the sum of its three parts (v0269_m)Warning
Every COREP own funds rule, by template
Checks like this one, run at the point of submission, are the first step to real-time supervision.