EBA · 2017_3504 Final Q&A

Reporting of transfer between capital surplus (share premium) and retained earnings in FINREP F 46 template.

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
99
Topic
Supervisory reporting - FINREP (incl. FB&NPE)
Submitted by
Competent authority
Submitted
2017-08-31
Answered
2019-10-04
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

Under the Hungarian legislation negative balance of retained earnings could be offset by a transfer from other elements of own funds. If such transaction occurs how should it be reported in template F46?

Background

One of the Hungarian institutions used its capital surplus to offset the negative balance of retained earnings. In our opinion, the following cells should be used to report the transaction in FINREP template F 46.00: -         row: Transfers among components of equity (160); column: Share premium (020), and -         row: Transfers among components of equity (160); column: Retained earnings (060). The cell “Transfers among components of equity in retained earnings” / “Retained earnings” {r160, c060} is usable hence this leg of the transaction can be reported in the template. However the corresponding cell is inactive (grey) in case of share premium.

Answer

Notwithstanding general principles on offsetting laid down in IAS 1, paragraphs from 32 to 35, the use of share premium to offset negative balances of retained earnings shall be recorded in the statement of changes in equity as per paragraph 106(d) of IAS 1. It shall also be reported in template F 46.00 by using row 100 –”Capital reduction”. Accordingly, this operation shall be reported as follows: - {F 46.00, r100, c020}: reduction in the amount of share premium; and - {F 46.00, r100, c060}: increase in the amount of retained earnings.

Original source: European Banking Authority, Q&A ID 2017_3504

This Q&A is published by European Banking Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

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