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Eugenio Virguti XBRL Italia Partner of SOVEGA IT Systems

XBRL to improve credit risk management in ITALIAN Credit Guarantee Consortia ( Confidi ). Eugenio Virguti XBRL Italia Partner of SOVEGA IT Systems. Agenda. Confidi: What They Are and How They Work. Current Issues. An XBRL-driven Exchange of Information.

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Eugenio Virguti XBRL Italia Partner of SOVEGA IT Systems

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  1. XBRL to improve credit risk management in ITALIAN Credit Guarantee Consortia (Confidi) Eugenio Virguti XBRL Italia Partner of SOVEGA IT Systems 1

  2. Agenda Confidi: WhatThey Are and How They Work CurrentIssues An XBRL-driven Exchange of Information The XBRL Confidi Project – Major Steps Stakeholders Involved

  3. CONFIDI’s – What They Are and How They Work • 618 Confidisoperating on the Italianterritoryasat last December • 60 Confidis(approx 10%) are supervised by the Bank of Italy (SupervisedConfidi’s) and account for 73% of allguaranteevolumes • Since the introduction of Basel II, strong industryrestructuring, includingmergers and acquisition, to put up with growingcompetition, lowermargins and increasing capital requirements for banks, which in turn requirebetterquality of guaranteesissued

  4. CONFIDI’s – What They Are and How They Work Bankslendmoney to SME’s Confidi guaranteesrepayment of loan in whole or in part SME’sparticipate in Confidis by payingannualsubscriptionfees Confidis and Bankssign an agreementwhichcoversallloansguaranteed by Confidis. The agreementdefinesterms and conditions.

  5. Current issues …however…. • assessment of borrowingfirmsisonlycarried out by the lendingbank, with no proprietaryevaluation on the part of Confidis • Confidisrely on banks’ creditworthinessevaluationand theyonly look for counterguaranteemechanisms (albeitpartial and/or subject to specificconditions) • Confidisnotinformedon the firm’sriskdynamicsunless the firmdefaults and the bankcalls on the guarantee Need to improve the guarantee-issuing assessment process and implement units to measure and manage profitability and credit risks

  6. Current Issues • Need of co-operationbetweenbanks and Confidis • Use of IT systems to promptlyidentifyearlywarningsigns of distress(no relying on lenders’ information) • More focus on internalcontrols(asrequired by Bank of Italyregulations) Holisticapproach to define flow of information betweenbanks and Confidis

  7. An XBRL-driven Exchange of Information Sharedinvestments and higherefficiency to achievecritical mass of guaranteesvolumes Certification of Reference Data Model Direct Data Management or Through Independent Third Parties Confidi Data Base Confidi’s Banks Automated Data Flows (no manualactivities and no misinterpretations) Higherindependence of service providers Value Added Service Providers ie. Galileo, SEC, OASI, HP EDS, Aubay ELSAG, CABEL, TREND Engineering, others

  8. An XBRL-driven Exchange of Information • Define a unique data model (semantic data model) complying with Confidis information needs in order to: • Meetrisk management and monitoringneeds • Meetsupervisory reporting requirements • Implement a projectto define the means, the tools, the business units, the competencies, resources and structuresrequired to develop a consolidatedBanks-Confidis database thatenablesuploading, updating and maintenance of loan-related information • Participation of allstakeholdersinvolved (ConfidisAssociations, banking system, single Confidis, IT and regulatory reporting service providers, Bank of Italy, legal/operationsconsultants, etc.)

  9. XBRL Confidi Project – Major Steps The projectiscomprised of twophases: • aregulatory reporting phase, wherebanks and Confidisagree on a common reporting format and exchange data for the purposes of more accuratelycomplying with regulatory reporting requirements • arisk management phase, where data exchangebetweenbanks and Confidis are XBRL-aggregated for better credit riskassessment

  10. XBRL Confidi Project – Major Steps • Definition of Data Point Model to meetConfidi’sneeds in terms of risk management and regulatory reporting requirements • Primary information required (definition of XBRL information hierarchies) • Master Data of BorrowingFirms • Loansreceived by single bank • Loan status (active, distressed, etc.) • AmortizationSchedules • Return information to banks

  11. XBRL Confidi Project – Major Steps Data set name XBRL data hierarchies XBRL ConceptAttributes

  12. XBRL Confidi Project – Major Steps Drafttaxonomieshavealreadybeenproduced in February and instancecreationiscurrently under way. First phaseshould be completed by the end of June 2014.

  13. Stakeholders Involved • XBRL ITALY • Italian Confidi Associations • Promoting Confidi Associations • Confidis • Italian Banking Association (ABI) • Banks • Bank of Italy • Partner Universities • Software Partners • Infrastructure • Value Added Services • AdvisingPartners • Legal/Regulatory • Organisation • Others

  14. Thanks for yourattention!! Eugenio Virguti XBRL Italia Partner of SOVEGA IT Systems 14

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