The rule in plain words
The absolute value of non-financial corporations cannot be less than the absolute value of small and medium-sized Enterprises.
EBA checks it for twelve columns, from carrying amount (0010) to accumulated total write-offs (0090). That makes twelve 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.
Assets without significant increase in credit risk since initial recognition (Stage 1): the absolute value of Non-financial corporations >= the absolute value of Of which: Small and Medium-sized Enterprises
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 F 04.04.1 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
Breakdown of financial assets by instrument and by counterparty sector: financial assets at amortised cost (F 04.04.1)
Rows
- 0120Non-financial corporations
- 0125Of which: Small and Medium-sized Enterprises
Columns
- 0010Carrying amount
- 0015Assets without significant increase in credit risk since initial recognition (Stage 1)
- 0020of which: instruments with low credit risk
- 0030Assets with significant increase in credit risk since initial recognition but not credit-impaired (Stage 2)
- 0040Credit-impaired assets (Stage 3)
- 0041Purchased or originated credit-impaired financial assets
- 0050Assets without significant increase in credit risk since initial recognition (Stage 1)
- 0060Assets with significant increase in credit risk since initial recognition but not credit-impaired (Stage 2)
- 0070Credit-impaired assets (Stage 3)
- 0071Purchased or originated credit-impaired financial assets
- 0080Accumulated partial write-offs
- 0090Accumulated total write-offs
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}.
abs({F_04.04.1,r0120,c0050,}) >= abs({F_04.04.1,r0125,c0050,})The next five:
abs({F_04.04.1,r0120,c0020,}) >= abs({F_04.04.1,r0125,c0020,})abs({F_04.04.1,r0120,c0090,}) >= abs({F_04.04.1,r0125,c0090,})abs({F_04.04.1,r0120,c0030,}) >= abs({F_04.04.1,r0125,c0030,})abs({F_04.04.1,r0120,c0040,}) >= abs({F_04.04.1,r0125,c0040,})abs({F_04.04.1,r0120,c0041,}) >= abs({F_04.04.1,r0125,c0041,})And 6 more, the same formula for the other cells it covers.
Other rules on F 04.04.1
- Debt securities, carrying amount must equal the sum of its two parts (v23400_h)Warning
- Loans and advances, carrying amount must equal the sum of its two parts (v23381_h)Warning
- Financial assets at amortised cost must equal debt securities plus loans and advances (v23856_h)Warning
- Instruments with low credit risk cannot be more than assets without significant increase in credit risk since initial recognition (Stage 1) (v10683_m)Warning
- Gross carrying amount: loans and advances, purchased or originated credit-impaired financial assets in F 04.04.1 must equal the sum of its two parts (v09616_m)Warning
- Accumulated impairment: loans and advances, purchased or originated credit-impaired financial assets in F 04.04.1 must equal the sum of its two parts (v09614_m)Warning
- Each of the 75 values it checks in breakdown of financial assets cannot be more than zero (v8155_s)Warning
- Debt instruments at cost or at amortised cost: a balancing check across information on performing and non-performing exposures, and breakdown of financial assets (F 18.00.b, v8142_m)Warning
Every FINREP 9 rule, by template
Checks like this one, run at the point of submission, are the first step to real-time supervision.