Question ID
2025_7516
Legal act
Directive 2014/59/EU (BRRD)
Topic
Interactions with the CRR / CRD IV and the BRRD
Article
45
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Draft ITS on the provision of information for the purpose of resolution plans
Article/Paragraph
1
Type of submitter
Credit institution
Subject matter
Clarification Request Regarding Validation Rule 6514_m for LDR Template T.04 and Its Comparison of Own Funds with Outstanding Principal Plus Accrued Interest
Question

For example, for financial instrument measured at fair value, the inclusion of hedge adjustments (which may either increase or decrease the measured value) may cause the amount recognized as own funds to be higher than the simple sum of outstanding principal and accrued interest. This could lead to a breach of Validation Rule 6514_m.
Given these developments, discrepancies may now arise due to the inherent variability introduced by the updated valuation adjustments.

Background on the question

Following the publication of the “EBA Report on the Monitoring of AT1, Tier 2 and TLAC/MREL Eligible Liabilities Instruments of EU Institutions (EBA/REP/2024/11)”, that confirms the alignment of prudential treatment to accounting valuations—whereby hedge adjustments, accrued interest and related valuation effects are now fully incorporated into the own funds figures, the Bank has noted that Validation Rule 6514_m—as implemented within LDR Template T.04—verifies that  the reported own funds amount cannot be higher than the sum of outstanding principal plus accrued interest.

Submission date
Rejected publishing date
Rationale for rejection

This question has been rejected because the matter it refers to has already been identified and will be considered for a forthcoming version of the Reporting framework / release of the respective validation rules.
 

Status
Rejected question