Question ID:
2017_3182
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Topic:
Supervisory reporting - FINREP (incl. FB&NPE)
Article:
99
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Regulation (EU) No 680/2014 - ITS on supervisory reporting of institutions (repealed)
Article/Paragraph:
Annexes III, IV and V
Disclose name of institution / entity:
Yes
Name of institution / submitter:
Austrian National Bank
Country of incorporation / residence:
Austria
Type of submitter:
Competent authority
Subject Matter:
Validation rule v3950_s for nGAAP
Question:

For some Institution, which don't follow the IFRS recommendations respective interest income on liabilities and interest expense on assets it might happen,,that they show negative interest income. Because according to Austrian GAAP it it is allowed, that negative interest rates reduce interest income and might turn negative. So v3950_s can not be fulfilled in some cases and therefore v3950_s should be "non-blocking" for nGAAP reporters.

Background on the question:

v3950_s should be 'non-blocking', because for nGAAP Reporters, which don't follow the IFRS recommendations, interest income might turn negative.

Date of submission:
27/02/2017
Published as Final Q&A:
04/08/2017
Final Answer:

Validation rule v3950_s ({F 16.01.a} >= 0) assumes that interest income and expense are always shown as positive values.

Annex V of Regulation (EU) No 680/2014 (ITS on Supervisory Reporting, as amended by Regulation (EU) 2016/1702) stipulates as follows:

  • ‘Under IFRS and where not provided otherwise in National GAAP based on BAD, interests in relation to financial liabilities with a negative effective interest rate shall be reported in interest income, in ‘Interest income on financial liabilities’. These liabilities and their interests give rise to a positive yield for an institution.’
  • ‘Under IFRS and where not provided otherwise in National GAAP based on BAD, interests in relation to financial assets with a negative effective interest rate shall be reported in interest expense, in ‘Interest expense on financial assets’. These assets and their interests give rise to a negative yield for an institution.’

The FINREP reporting outline is set by the templates and DPM. The values shown in the accounting framework have to be allocated to the respective FINREP cells. Therefore, for the purposes of supervisory reporting, negative interest on assets / positive interest on liabilities results in the amounts being shown as expense / income in specific rows to capture this phenomenon as a positive value. In this case, validation rule v3950_s should be respected also by nGAAP reporters.

However, if it is not provided by a National GAAP based on BAD to consider negative interest  on assets as expenses or positive interest on liabilities as income, the consequence might be that the specific rows dedicated to negative interest cannot be filled in as these values are not available. In such a case, v3950_s ({F 16.01.a} >= 0) may fail for a justified reason. To take account of this fact, v3950_s was demoted ‘non-blocking’. 

Status:
Final Q&A
Answer prepared by:
Answer prepared by the EBA.
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