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 eight columns: gross carrying amount, gross carrying amount held for trading or trading, financial assets subject to impairment, including cash balances at central banks and other demand deposits, forborne gross carrying amount, non-performing gross carrying amount, defaulted gross carrying amount, accumulated impairment, and accumulated negative changes in fair value due to credit risk on non-performing exposures. That makes eight 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.
Of which: financial assets subject to impairment, including cash balances at central banks and other demand deposits: 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 20.04 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
Geographical breakdown of assets by residence of the counterparty (F 20.04)
Rows
- 0190Non-financial corporations
- 0200Of which: Small and medium sized enterprises
Columns
- 0010Gross carrying amount
- 0011Of which: held for trading or trading
- 0012Of which: financial assets subject to impairment, including cash balances at central banks and other demand deposits
- 0022Of which: forborne
- 0025Of which: non-performing
- 0026Of which: defaulted
- 0031Accumulated impairment
- 0040Accumulated negative changes in fair value due to credit risk on non-performing exposures
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_20.04,r0190,c0012,}) >= abs({F_20.04,r0200,c0012,})The next five:
abs({F_20.04,r0190,c0011,}) >= abs({F_20.04,r0200,c0011,})abs({F_20.04,r0190,c0031,}) >= abs({F_20.04,r0200,c0031,})abs({F_20.04,r0190,c0010,}) >= abs({F_20.04,r0200,c0010,})abs({F_20.04,r0190,c0022,}) >= abs({F_20.04,r0200,c0022,})abs({F_20.04,r0190,c0026,}) >= abs({F_20.04,r0200,c0026,})And 2 more, the same formula for the other cells it covers.
Other rules on F 20.04
- Accumulated impairment cannot be more than zero (v09608_s)Warning
- Defaulted gross carrying amount cannot be more than non-performing gross carrying amount (v7903_m)Warning
- Accumulated negative changes in fair value due to credit risk on non-performing exposures cannot be more than zero (v5698_s)Warning
- None of the 75 values it checks in geographical breakdown of assets can be negative (v5697_s)Warning
- If accumulated impairment is not zero, gross carrying amount must be more than zero (v5007_m)Warning
- None of the 54 values it checks in geographical breakdown of assets can be negative (v4434_s)Warning
- Households cannot be less than credit for consumption (v3152_m)Warning
- Non-financial corporations cannot be less than loans collateralized by commercial immovable property (v3151_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.