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Technical Standards on supervisory reporting. XBRL UK 17 June 2013 | London Meri Rimmanen | EBA Wolfgang Strohbach | EBA. Outline. Financial supervision in the EU – role of the EBA Single rulebook and the case for harmonised supervisory data
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Technical Standards on supervisory reporting XBRL UK 17 June 2013| London Meri Rimmanen| EBA Wolfgang Strohbach| EBA
Outline • Financial supervision in the EU – role of the EBA • Single rulebook and the case for harmonised supervisory data • Technical standards on supervisory reporting – main features • Facilitating implementation of supervisory reporting requirements
European System of Financial Supervision EU central banks EU supervisors ESFS Joint Committee ESRB EIOPA ESMA EBA Micro prudential Macro prudential
Outline • Financial supervision in the EU – role of the EBA • Single rulebook and the case for harmonised supervisory data • Technical standards on supervisory reporting – main features • Facilitating implementation of supervisory reporting requirements
Technical Standards on supervisory reporting Objective: increase efficiency in reporting systems, enhance data analysis capabilities • Reporting before… and after… Supervisor 1 Supervisor 1 Group A, B, C Common framework Group A Supervisor 2 Supervisor 2 Group B Supervisor 3 Supervisor 3 Group C Different data definitions Common data definitions, instructionsSeveral formats Single format Different technologies IT standards
ITS on supervisory reporting - benefits • Directly applicable • No implementation, or interpretation of the Regulation on national level ensures common definitions and instructions • Technical translation of reporting requirements • Data point model and XBRL taxonomy • Common validation rules • Truly harmonised supervisory data • Helps supervisors to assess asset quality, risk concentrations, liquidity positions, conduct peer analysis, analyse risk parameters across institutions • Harmonised definitions, especially on forbearance, non-performing loans and asset encumbrance significantly enhance identification of potential systemic risks
The role of EBA – main objectives and tasks Main objectives: Establishing EU single rule book Promoting and enhancing quality and consistency of supervision Reinforcing oversight of cross-border groups Early warning of upcoming vulnerabilities Effective early intervention and bank resolution Main tasks: Develop binding technical standards, guidelines, recommendations Promoting common supervisory culture / supervisory practices Peer group analyses and peer reviews Monitoring effectiveness colleges EU-wide risk assessments and stress tests Risk dashboards Reacting on risk warnings Handling of emergency situations
Benefits of harmonised data • Data from banks across the EU provides a more comprehensive picture on exposures, risks, potential pockets of vulnerabilities • Peer analysis, identification of institutions posing systemic risk (outliers) • Provide high quality benchmarks for stress testing (harmonised definitions) and asset quality reviews • Improve analysis on concentration risk (large exposures, geographical breakdown of exposures) • Facilitate data sharing among competent authorities
Outline • Financial supervision in the EU – role of the EBA • Single rulebook and the case for harmonised supervisory data • Technical standards on supervisory reporting • Solvency • Financial reporting • Asset encumbrance • Large Exposures • Liquidity • Leverage ratio • Proportionality • Facilitating implementation of supervisory reporting requirements
ITS on supervisory reporting – what is covered • EBA to deliver ITS in the following areas of the Capital Requirement Regulation (CRR): • Art 99 Solvency reporting, financial reporting • Art 100 Asset encumbrance • Art 101 Mortgage exposures reporting • Art 394 Large exposures reporting • Art 415 Liquidity ratios reporting • Art 430 Leverage ratio reporting • Integrated approach to ITS development • Several ITS packaged as one EU Regulation which is directly applicable to all credit institutions and investment firms • Use of common structure/conventions/concepts/definitions
ITS on supervisory reporting – COREP • Reporting population, level of application and scope of consolidation • Credit institutions and investment firms • Consolidated level and individual level • CRD scope of consolidation • Frequency • Quarterly • Exception: semi-annually • Material operational risk losses (OPR Details) • Securitisation transactions (SEC Details) • Reporting delay 6 weeks • Compliance monitoring • Monitoring compliance of capital requirements regulation • Granular information on risk parameters, risk concentrations, securitised exposures • Based on the CEBS reporting guidelines
ITS on supervisory reporting - FINREP • Reporting population, level of application and scope of consolidation • IFRS institutions on a consolidated basis • National supervisory authorities may extend the implementation also to other institutions • CRD scope of consolidation • Frequency • Quarterly, semi-annually and annually • Reporting delay 6 weeks • Monitoring, IFRS-based reporting • Harmonised financial reporting following as much as possible IFRS • Some presentational options have been restricted in order to develop harmonised templates • In some cases the data requirements go beyond IFRS to provide data for risk assessment and analysis of systemic risks • Forbearance and non-performing loans reporting • Based on the CEBS reporting guidelines
Outline • Financial supervision in the EU – role of the EBA • Single rulebook and the case for harmonised supervisory data • Technical standards on supervisory reporting – main features • Facilitating implementation of supervisory reporting requirements
ITS on supervisory reporting - Data Point Model • What is the DPM? • A data point is a data element required in the reporting framework, i.e. each template cell will correspond to a data point, and different cells with the same meaning should correspond to the same data point. • The DPM is a data model that captures the information requirements of the reporting framework. • The DPM is a dimensional model, meaning that each data point is categorised by a set of elements of different dimensions. • Why the DPM? • Complex or dubious business concepts are broken down into more elementary concepts, in order to clarify the meaning of a data point. • The DPM expresses the reporting requirements at a logical level, without regard for any particular IT implementation. • The DPM bridges the gap between business and IT languages, providing a common ground of understanding. • The DPM will be the source for the generation of XBRL taxonomies.
ITS on supervisory reporting - Proportionality • Reporting requirements shall be proportionate to the nature, scale and complexity of the activities of the institutions • Proportionality included in different ways: • Size of an institution • Small institutions are exempted for some templates (asset encumbrance) • Non-significant activities/exposures/risk • Threshold for level of exposure/activity (Geographical breakdown, derivatives in leverage ratio) • Inherent proportionality • Templates reported only if a special approach/method is used or if institution has exposures (SEC, SEC details, IRB) • Reduced frequency • Templates where reduced frequency provides adequate data (Group structure, detailed and contingent asset encumbrance)
Facilitating implementation – Q&A mechanism • Uniform interpretation of data requirements across EU • Detailed instructions included in the ITS Annexes • Q&A tool on EBA website (as of July 2013) • Public can post their questions via a web tool • EBA will • Review, categorise and prioritise questions • Publish all answers • Translate answers where necessary
Facilitating implementation – amendments of the ITS • Currently under consultation • Asset encumbrance • Forbearance and Non-performing loans (FINREP) • Liquidity monitoring tools • The ITS will be amended with these parts after the consultations • Application dates will be later than 1 January 2014