Claims Management: Reimbursement to Insured Depositors 2 – 4 December 2013 Taipei, Taiwan

1. Effective AutomationReimbursement in the private bankingsector in GermanyOlaf HartenfelsDepositProtectionand Trust Company, Cologne Claims Management: ReimbursementtoInsuredDepositors 2 – 4 December 2013 Taipei, Taiwan

2. Outline Short overviewofreimbursement in Germany IT-tools Basics aboutsafetynet in Germany „EAEG presenterdatafile“ Auditing the EAEG presenterdatafile

3. BasicsThreeCategoriesofbankingbusiness Supervisory Authority Private commercialbanks Public Sectorbanks Cooperativebanks 2 DGS Institutionalprotectionscheme

4. BasicsGerman DepositGuaranteeScheme German Banks CompensationScheme Statutory „basic cover“ upto € 100.000 Auditing Institution forthedepositprotection System DepositProtection Fund Voluntary 30% relevant liablecapital

5. BasicsTask andservicesofthe Auditing Association Auditing Institution forDepositProtection Fund (ESF) andCompensationSchemeof German Banks (EdB) • 175 memberbanks • Depositprotectionaudits • Admission andownershipcontrol • Other riskmanagementactivitiesfordepositinsurance • In addition: Audits 50 bankswhichonlybelongstotheEdB • www.pv-banken.de

6. Basics Affiliatedcompaniesofthe Auditing Associationof German Banks

7. Services oftheaffiliatedcompanies Conducting annualaudits non-bank/near-banksector IT internalauditmandates , carrying out admissionaudits www.wpg-revision.de Conductsratingprocedurefor all memberbanks on behalf ofthe Auditing Association, independent externalratingcompany , ESMA registered andcertified CRA www.gbb-rating.de IT auditsandadvice, dataprotection, softwarecertification www.gdb-beratung.de Examiningandpayingdepositorclaimsforcompensation, supportingadministrators, assetliquidation www.eis-treuhand.de

8. Reimbursements in thepastyears 2001 2001 2006 Bremer-haven 2003 Berlin 2002 2008 Düsseldorf Dresden 2008 Frankfurt 2010 Bad Mergentheim 2002 Singen

9. Reimbursement Depositors AmountofDeposits 800 8.200 Mio. $ 12.000 160 Mio. $ 1.900 24 Mio. $ 93 Mio. $ 57.000

10. Different typesofbanks small big Size standard selfproduced IT-System structured plainvanilla Product local international Branches institutional privat customer

11. Reimbursement of depositorssince 2011 Periodfordeliveringthedatafile No claim of compensation Compensationofincomingregistrationswithin 20 businessdaysfrom determinationof compensation event Compensation of incoming registrations within 20 business daysfrom date of receipt

12. Reimbursement of depositorssince 2011 Announcing thecompensation event Analysing and preparingbank data Creating and posting the forms to submit claims Calculating and disbursingthe compensation claims Reporting (internal / external) Observating external interfaces Checking and establishingthe consistency of bank data Ordering of interest accrualon a daily basis Monitoring IT including infrastructure Personnel Administration

13. EAEG-Einreicherdatei • Variousformsofdatainput / Data output • Data integrity • Analysis of large datasets • Specificdata-analysisfunctions • Skripts • MS Access baseduserinterface • Using VBA-Scripting forprogramlogic • SQL database • Modular design

14. ACL / InvComp Internal accounting data Insolvent institut Compensationdata InvComp Check lists formanualverification Datapreprocessing Ongoing monitoringof claim forms EAEG presenterdata file Capture todocument stacks Data preprocessingInvComp ACL Compensationdata Creatig file forinternal acc. data Letters forcustomer Creating file for payment system(SEPA) Info. Sheet /Form to submit claim Variousreports SEPACredit Transfer Third institut InvComp

15. Reimbursement of depositorssince 2011 Deposit Guarantee and Investor Compensation Act (EAEG) "… the institution shall make the documents necessary for the creditors’ compensation available to the compensation scheme promptly, and at the latest within one week." "The compensation scheme shall meet duly examined claims […] no later than 20 working days".

16. EAEG presenter data file Version 3.0 Data file content Unique key values Data file format German Regulation on the Accounting of Credit Institutions and Financial Institutions (Verordnung über die Rechnungslegung der Kreditinstitute und Finanzdienstleistungsinstitute – RechKredV) Storage type Text file with field delimiters Numerous Unification for certain key values: Character set In accordance with DIN 66003:1999-02 “liabilities to customers” [liability item 2] in Section 21 Field delimiter *("Asterisk" – ASCII Hexcode X'2A') Range of values for "Exclusion indicator" In addition: End-of-record characters CRLF["Carriage Return" (ASCII Hexcode X'0D'), followed by "Line Feed" (ASCII Hexcode X'0A')] Range of values for "EdB key" data field “contingent liabilities” (liability item 1 under the line) in Section 26 “claims on customers” (asset item 4) defined in Section 15

17. EAEG presenter data file Version 3.0

18. EAEG presenter data file

19. EAEG presenter data file

20. EAEG presenter data file

21. EAEG presenter data file Version 3.0

22. Outlook for future Realisation and/or support by Version 3.0 Proposal for a directive on Guarantee Schemes COM(2010) 369 / July 2010 Reducing the payout deadline from twenty to seven days Provision of information about eligible and covered deposits at any time after request of DGS Tagging of all non-repayable deposits in system Possibly benefits when calculating contributions for DGS

23. Implementationofthe EAEG presenterdatafile

24. Information Member bankswereinformedby German Private Commercial Banks CompensationSchemefor Investors (EdB) Liability to create EAEG presenter data file Audits of correctness advised

25. Support Supportvia email Test datafiles spezifikation@einleger-entschaedigung.de Review

26. Experiences & Auditprocess Review concerningtestdatefiles Highlights in % regarding total numberoffiles Database(incl. accruedinterest) 85% Joint accounts / SCV 43% Marking / Tagging 35% Technical correctness (length, form, type ofdatafields) 32% Debitors 28% Others 43%

27. Support

28. Auditing-Goals Section5 (4) EAEG: Content ofdelivered EAEG presenterdatafile hasqualitytoreimbursewithin 20 days Section 5 (2) EAEG: EAEG presenterdatafile hastobedeliveredby bankwithinoneweek

29. Auditing Frameworks Section 9 (1) of Deposit Guarantee and Investor Compensation Act (EAEG) “The compensation scheme shall perform regular and ad hoc audits of the institutions assigned to it in order to assess the risk of a compensation event occurring.”

30. Forexample auditingat: Request tobankformakingavailablespecific dataanddocuments A-Bank EAEG presenter data file D-Day 18th March Daily balancesalso per 18th March 2013 Illustration of all depositproducttypes A-Bank has per D-Day 18th March 2013 Overviewaboutandgrantedaccessto all blockagecodes A-Bank has in hismainIT-application, usingtoadmindepositproducts IT-deskduringauditingincl. righttogetinformationsaboutclients, accountsandtransactions Access tocustomercontractdocuments for relevant clients

31. Data base Buildingdatabaseof EAEG presenterdatafile Liability against customers Loans against customers Contingent liabilty EAEG presenter data file Non-eligible eligible covered Missingdataofclientsand/orclients-balances in caseofwrong-buildeddatabase

32. Data base System 1 Buildingdatabaseof EAEG presenterdatafile System 2 Liabilityagainstcustomers Liability against customers Loans against customers Loansagainstcustomers Contingent liabilty Contingent liabilty EAEGpresenter data file EAEG-Einreicherdatei 1 EAEG-Einreicherdatei 2 eligible Non-eligible covered

33. Data base Example Client K. System 1 System 2 Buildingdatabaseof EAEG presenterdatafile 70.000 Euro 40.000 Euro Compensation 110.000 Euro EAEG presenter data file1 EAEG presenter data file 2 eligible Non-eligible eligible nicht entschädi-gungsfähig covered covered

34. Data base / accrued interest 18.03. § 5 (1)EAEG Compensation event 31.12. 30.03. 31.12. Buildingdatabaseof EAEG presenterdatafile Accruedinterest Product-types Current account Savings Fixed-term deposit Accruedinterest

35. Data base / data form Incorrect individual- and aggregate balances • Marking of debit- and credit balances • Thousands separator Data form(technical) 1.000,00 1,000.00 Compliance ofinformationobligationdelayedormissing § 5 (2) EAEG Mainstrasse 14 Data field-length:

36. Data base / debit balances Missingconsideration Depositors with debit balances Data basebank Missingconsideration Consideration clients only with debit balances EAEG presenter data file Accrued interest for debit and credit balances

37. Data base / debit balances Consideration clients only with debit balances Depositors with debit balances Data basebank/ EAEG presenterdatefile Missingconsideration Consideration clients only with debit balances Accrued interest for debit and credit balances

38. Data base / debit balances Accrued interest for debit and credit balances Depositors with debit balances Data basebank/ EAEG presenterdatefile Missingconsideration Consideration clients only with debit balances Accrued interest for debit and credit balances

39. Audit Background Organisational basics Programming order-, test-, release- andlivegoing-proceedure Definition of functional responsibility Method description

40. Further necessarychecks Further datahastobe check: Level of coverage Consistenceofclientdata (name, adress, dateofbirth…) Consistenceofaccountdata (numberaccountholders, due date..) …

41. Audit-report • EAEG presenterdatafile was deliveredwithinthelaw (oneweek) • Content isconvenienttoreimburse in 20 days Audit-reportby Federal Financial Supervisory Authority (BaFin) Addressed audience EdB

42. Olaf Hartenfels Fon: +49-221-91 26 97-412 Fax: +49-221-91 26 97-470 o.hartenfels@eis-treuhand.de Thankyou!