The rule in plain words
None of the values it checks in breakdown of financial assets can be negative.
EBA checks it for six columns: carrying amount, assets without significant increase in credit risk since initial recognition (Stage 1), instruments with low credit risk, assets with significant increase in credit risk since initial recognition but not credit-impaired (Stage 2), credit-impaired assets (Stage 3), and purchased or originated credit-impaired financial assets. And for 15 rows, from debt securities (0010) to financial assets at amortised cost (0140). That makes 90 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.
Credit-impaired assets (Stage 3): Non-financial corporations >= 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 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
- 0010Debt securities
- 0020Central banks
- 0030General governments
- 0040Credit institutions
- 0050Other financial corporations
- 0060Non-financial corporations
- 0070Loans and advances
- 0080Central banks
- 0090General governments
- 0100Credit institutions
- 0110Other financial corporations
- 0120Non-financial corporations
- 0125Of which: Small and Medium-sized Enterprises
- 0130Households
- 0140FINANCIAL ASSETS AT AMORTISED COST
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
A worked example
The first of its checks, with simple numbers.
Non-financial corporations, credit-impaired assets (Stage 3) 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}.
{F_04.04.1,r0120,c0040,} >= 0The next five:
{F_04.04.1,r0130,c0030,} >= 0{F_04.04.1,r0050,c0010,} >= 0{F_04.04.1,r0140,c0015,} >= 0{F_04.04.1,r0090,c0030,} >= 0{F_04.04.1,r0010,c0015,} >= 0And 84 more, the same formula for the other cells it covers.
Other rules on F 04.04.1
- A balancing check across information on performing and non-performing exposures, and breakdown of financial assets (F 18.00.b, v5235_m)Warning
- Households, accumulated impairment, accumulated negative changes in fair value due to credit risk and provisions must equal the sum of its four parts (row 0150, v5234_m)Warning
- Loans and advances: non-financial corporations, accumulated impairment, accumulated negative changes in fair value due to credit risk and provisions must equal the sum of its four parts (row 0120, v5233_m)Warning
- Loans and advances: other financial corporations, accumulated impairment, accumulated negative changes in fair value due to credit risk and provisions must equal the sum of its four parts (row 0110, v5232_m)Warning
- Loans and advances: credit institutions, accumulated impairment, accumulated negative changes in fair value due to credit risk and provisions must equal the sum of its four parts (row 0100, v5231_m)Warning
- Loans and advances: general governments, accumulated impairment, accumulated negative changes in fair value due to credit risk and provisions must equal the sum of its four parts (row 0090, v5230_m)Warning
- Loans and advances: central banks, accumulated impairment, accumulated negative changes in fair value due to credit risk and provisions must equal the sum of its four parts (row 0080, v5229_m)Warning
- Debt instruments at cost or at amortised cost: loans and advances, accumulated impairment, accumulated negative changes in fair value due to credit risk and provisions must equal the sum of its four parts (v5228_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.