LR1 on alternative treatment of the exposure measure - accounting balance sheet value

The LR1 template (C 40.00) collects data on the alternative treatment of derivatives, repurchase transactions, securities or commodities lending or borrowing transactions, long settlement transactions and margin lending transactions, and off-balance sheet items. According to the reporting instructions (Annex XI, par. 22, of the Commission Implementing Regulation (EU) No 680/2014 (ITS on supervisory reporting)), institutions shall determine the “accounting balance sheet values” to be reported in column 010 of the template “based on the applicable accounting framework in accordance with art. 4(1)(77) of the CRR (Reg. (EU) n. 575/2013)”. Pursuant to art. 4(1)(77) of the CRR, “applicable accounting framework” means the accounting standards to which the institutions are subject under Regulation (EC) n. 1606/2002 or Directive 86/635/EEC. Regulation 1606/2002 establishes that publicly-traded companies shall prepare their annual accounts in conformity with the IFRSs. It also permits that Member States may extend this requirement to non-publicly traded companies, as well. Against this background, the values to be reported in column 010 of template LR1 may assume the use of CRM techniques or may not, depending on the type of accounting standards or principles adopted (i.e. IFRSs or national GAAPs). As a result, where the applicable accounting standards adopted to calculate the “accounting balance sheet value” do not permit the use of CRM techniques and netting, the values reported in column 010 and 020 may coincide. On the contrary, should the applicable accounting framework admit the use of CRM techniques and netting for the calculation of the “accounting balance sheet values”, the values reported in row 010 will be different from those reported in row 020. In particular, the values in row 020 will be reported gross-up.