EBA · 2021_6264 Rejected question

Validation rule v6011_h

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
Annex V
Topic
Supervisory reporting - FINREP (incl. FB&NPE)
Submitted by
Credit institution
Submitted
2021-11-05
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Question

The validation rule v6011_h checks if the accumulated impairment of loans and advances for non-financial corporations (row 190) is lower than the sum of accumulated impairments of small and medium-sized enterprises (row 200), belonging to non-financial corporations. In most cases the accumulated impairment is negative. e.g.: Impairment = - 40 r190 (Loans and advances NFC) = -40 r200 (of which: SME) = 0 In this case c190 < c200 and the validation rule is not violated. The question is, how should we deal with positive accumulated impairment due to POCI deals? e.g.: Impairment = + 40 r190 (Loans and advances NFC) = +40 r200 (of which: SME) = 0 In this case c190 > c200 and the validation rule is violated, although positive impairment is generally allowed.

Background

Validation rule v6011_h requires the following condition to be fulfilled: F 20.04 (c031, All sheets), {r190} <= +{r200} Column 031 in F20.04 refers to accumulated impairment, Row 190 refers to Loans and advances for Non-financial corporations and row 200 refers to of which: small and medium-sized enterprises of the row 190. The biggest change in the DPM3.0 (30.06.2021) was the separate disclosure of POCI deals in different tables. According Annex V Part 2. 70(d) “Accumulated impairment for purchased or originated credit-impaired financial assets can be positive in case of impairment gains exceeding any previously recognised impairment losses”. According to rule v6011_h it’s forbidden to disclosure positive impairment in table F20.04.
No answer published yet.

Original source: European Banking Authority, Q&A ID 2021_6264

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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