EBA · 2018_4189 Final Q&A

Adjustments due to IFRS 9 transitional arrangements included in RWAs and interaction with validation rule v3689_s in template C5.01.

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
99
Topic
Supervisory reporting - COREP (incl. IP Losses)
Submitted by
Credit institution
Submitted
2018-08-08
Answered
2019-07-12
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

In template C5.01 validation rule v3689_s states that R010 C040 cannot be negative, should R010 C040 be excluded from this validation rule?

Background

Row 440, Column 040 asks for adjustments due to IFRS 9 transitional arrangements included in RWAs and is a negative figure. The correct logic for the template would be to also insert this figure into: a. R010 ‘TOTAL ADJUSTMENTS’ : C040 ‘Adjustments included in RWAs b. R100 ‘OTHER TRANSITIONAL ADJUSTMENTS’ : C040 ‘Adjustments included in RWAs’ The adjustments due to IFRS 9 transitional arrangements included in RWAs in Row 440 Column 040 relates to Article 7(a) and 7(b) of EU Regulation 2017/2395, adjustments to RWAs due to not taking into account the effects of credit loss provisions included in the transitional CET1 add back on deferred tax assets and specific credit risk adjustments on standardised exposures.

Answer

Article 1.7 of Regulation (EU) 2017/2395 refers to the IFRS 9 transitional arrangements ‘by not taking into account the effects of the expected credit loss provision in CET1’. The adjustment of the RWA as reporting in column 040 of template C 05.01 of Annex I to Regulation (EU) No 680/2014 (ITS on Supervisory Reporting) is consequently necessarily a positive amount. Hence, validation rule v3689_s is correct.

Original source: European Banking Authority, Q&A ID 2018_4189

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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