EBA · 2023_6711 Final Q&A

Finrep validation v11942_m - Collaterals received on NPL

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
178
Topic
Supervisory reporting - FINREP (incl. FB&NPE)
Submitted by
Other
Submitted
2023-02-08
Answered
2023-04-28
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

According to the validation rule v11942_m it has been stated that {F 18.00.d, r0070, c0200} + {F 18.00.c, r0070, c0210} <= {F 18.00.a, r0070, c0060} + {F 18.00.b, r0070, c0150}. However, in our case net amount of total gross carrying amount of non-performing loans (NPL) + Accumulated Impairment is not higher than the amount of total collaterals and financial guarantees received for these loans. Since this validation ID’s severity is being stated as ‘warning’ can we proceed with the actual amounts and report with this situation?

Background

In this validation rule, it is being blocked to submit any collateral amounts for non-perfoming loans which should not be the case as the collateral amounts can be higher than the net of gross NPL plus accumulated impairment.

Answer

In accordance with Regulation (EU) 2021/451, Annex V, Part 2, paragraph 239 which refers to paragraph 172, when talking about debt instruments at amortised cost, the sum of the amounts of the guarantee and/or collateral “shall be capped at the carrying amount […] after deduction of provisions of the related exposure”. Therefore, the sum of r0070, c0200 and c0210 shall not exceed the sum of c0060 and c0150. The validation rule v11942_m is correct.

Original source: European Banking Authority, Q&A ID 2023_6711

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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