The rule in plain words
Each of the values it checks in internal MREL and internal TLAC (ILAC) cannot be more than zero.
EBA checks it for two columns: internal MREL and internal TLAC. And for three rows: (-) own eligible liabilities instruments: Unused prior permission amounts, (-) own funds instruments and eligible liabilities instruments issued by non-resolution entities of the same resolution group, and (-) of which: own funds instruments issued by liquidation entities. That makes six 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.
Internal TLAC: (-) Own funds instruments and eligible liabilities instruments issued by non-resolution entities of the same resolution group <= 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 M 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
Internal MREL and internal TLAC (ILAC) (M 03.00)
Rows
- 0265(-) Own eligible liabilities instruments: Unused prior permission amounts
- 0290(-) Own funds instruments and eligible liabilities instruments issued by non-resolution entities of the same resolution group
- 0293(-) of which: Own funds instruments issued by liquidation entities
Columns
- 0010Internal MREL
- 0020Internal TLAC
A worked example
The first of its checks, with simple numbers.
(-) own funds instruments and eligible liabilities instruments issued by non-resolution entities of the same resolution group, internal TLAC 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}.
{M_03.00,r0290,c0020,} <= 0The next five:
{M_03.00,r0293,c0010,} <= 0{M_03.00,r0265,c0020,} <= 0{M_03.00,r0265,c0010,} <= 0{M_03.00,r0290,c0010,} <= 0{M_03.00,r0293,c0020,} <= 0Other rules on M 03.00
- Own funds and eligible liabilities as a percentage of the total exposure measure cannot be less than permitted guarantees (v22345_m)Warning
- Own funds and eligible liabilities as a percentage of the total risk exposure amount cannot be less than permitted guarantees (v22344_m)Warning
- A lower-limit check on internal MREL and internal TLAC (ILAC) (v22340_m)Warning
- A conditional check on internal MREL and internal TLAC (ILAC) (v22545_m)Warning
- A conditional check on internal MREL and internal TLAC (ILAC) (v22546_m)Warning
- Internal TLAC cannot be negative (v10840_s)Warning
- The sum of three rows cannot be more than liabilities and own funds less excluded liabilities (v10817_m)Not run yet
- Eligible own funds, internal MREL plus eligible liabilities and guarantees, internal MREL cannot be more than own funds and eligible liabilities for the purpose of internal MREL (all sheets added up) (v10816_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.