FINREP – Reporting of accumulated changes in fair value due to credit risk and FINREP sign convention

The FINREP framework follows a sign convention based on a credit/debit convention which is explained in Annex V, Part 1 paragraphs 9 and 10 of Regulation (EU) No 680/2014 - ITS on Supervisory reporting. Therefore the signs for the items in question need to be reported in the following way: a) Accumulated impairments, accumulated write-offs and allowances in additional templates of balance sheet statement (e.g. F 04.03, F 06.00) are reported with a negative sign as they are decreasing assets. b) Movements in allowances in additional templates of balance sheet statement (e.g. F 12.00) are reported with a sign describing if they are increasing or decreasing assets and both signs are possible. Increase in allowances is reported with a negative sign and decreases and reversals of impairments with a positive sign. c) However, in F 02.00 and in the additional template of statement of profit or loss (e.g. F 16.07a) a positive balance and increase in expenses from impairments are reported with a positive sign and a negative balance including reversals and decrease in expenses of impairments with a negative sign in the same template. d) Accumulated losses in fair value due to credit risk should be reported with a negative sign and accumulated gains in fair value due to credit risk with a positive sign. Therefore changes in fair value due to credit risk can have both signs in additional templates of balance sheet statement as cells on changes in fair value due to credit risk can refer to accumulated losses or accumulated gains. When reported together with accumulated impairments (negative sign) (e.g. F 06.00, F 20.07) the item can have both signs. However, it should be clarified that the sign should be positive only when accumulated positive changes in fair value due to credit risk are larger than accumulated impairments and negative changes in fair value due to credit risk. In addition it is not expected that for non-performing exposures accumulated changes in fair value due to credit risk would be positive. e) Provisions on off-balance sheet commitments are reported with a positive sign, as they are increasing liabilities. An increase in provisions will be reported with a positive sign and a decrease with a negative sign in additional templates off balance sheet statement (e.g. F 43.00). Relevant validation rules have been deactivated where necessary and will be changed or deleted in the next possible release. Deactivated validation rules, that are correct based on the answer of this Q&A, will be reactivated. The DPM sign convention will be amended. Changes to DPM sign convention: F 06.00 column 020: both signs possibleF 20.07 column 020: both signs possibleF 04.09 column 030: negative signF 04.09 column 040: negative sign