The rule in plain words
Interest component, average value must equal the absolute value of net income, accounting value, year-3 plus the absolute value of net income, accounting value, year-2 plus the absolute value of net income, accounting value, last year divided by 3.
The headline gives only the kind of check and the template, because the rule is too long to say in a headline. The plain words above say all of it.
How the Line4 Check report words itShowHide
Word for word as the report shows it when the rule fails.
Interest component, Average Value = (the absolute value of Net Income, YEAR-3, accounting Value + the absolute value of Net Income, YEAR-2, accounting Value + the absolute value of Net Income, LAST YEAR, accounting Value) / 3
What to do if your filing fails it
- 01Open the template below and find the cells the rule reads.
- 02Work out both sides from your file, as the rule in plain words sets out, and compare them.
- 03EBA allows a small rounding difference, worked out from the decimals each value is reported with.
- 04It runs only when your filing indicators mark C 16.02 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
Operational risk - business indicator component (opr BIC) (C 16.02)
Rows
- 0010Interest component
- 0020Net Income
Columns
- 0010Accounting Value
- 0030Accounting Value
- 0050Accounting Value
- 0070Average Value
Show the rule as writtenShowHide
EBA's formula. Cells are written as {template, row, column, sheet}.
{C_16.02,r0010,c0070,} = (abs({C_16.02,r0020,c0010,}) + abs({C_16.02,r0020,c0030,}) + abs({C_16.02,r0020,c0050,})) / 3Other rules on C 16.02
- Net profit or loss applicable to banking book must equal the sum of its five parts (v90310_m)Warning
- Net profit or loss applicable to trading book must equal the sum of its three parts (v90309_m)Warning
- A balancing check on operational risk (row 0200, v90313_m)Warning
- Derivatives must equal trading and economic hedges plus hedge accounting (v90308_m)Warning
- Total assets must equal the sum of its five parts (v90307_m)Warning
- (interest expenses (including from leased assets (financial&Operating))) must equal the sum of its three parts (v90306_m)Warning
- Interest income (including from leased assets (financial & operating)) must equal the sum of its three parts (v90305_m)Warning
- A balancing check on operational risk (row 0110, v903112_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.