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XBRL: The vision of Dexia

XBRL: The vision of Dexia. Pellizzari Giancarlo Head of Prudential Policy Dexia Group. Agenda. Dexia: an European group The regulatory environment Main challenges Complexity ? XBRL Where are we ? Where do we go ? How to do it ? EU-US convergence Conclusions. Dexia: an European group.

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XBRL: The vision of Dexia

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  1. XBRL: The vision of Dexia Pellizzari Giancarlo Head of Prudential Policy Dexia Group

  2. Agenda • Dexia: an European group • The regulatory environment • Main challenges • Complexity ? • XBRL • Where are we ? • Where do we go ? • How to do it ? • EU-US convergence • Conclusions

  3. Dexia: an European group Dexia Holding: 27,5 EURBn Capitalization, world leader in public financing • Dexia Bank Belgique • Dexia Crédit Local (France) • Dexia BIL (Luxembourg) • FSA (Financial Security Assurance) – USA – Credit enhancement • Dexia Insurance Belgium • Deniz Bank (6th largest private bank in Turkey) • Factoring, leasing, real estate, IT, etc. • A group of 241 entities, 33.321 staff members and present in 33 countries

  4. Dexia: an European group Business portfolio : Segment contribution to net income - Group share (1) (1) Excluding non-operating items and central assets Treasury and Financial Markets Asset Management Investor Services Insurance Public/Project Finance and Credit enhancement Personal Financial Services Net income – Group share FY 2005: EUR 2,038M FY 2006: EUR 2,750 M

  5. The regulatory environment Home – host supervisors: • Home supervisors (working in a college) • CBFA – Belgian Banking, Finance and Insurance Commission (as lead supervisor) • The French Commission Bancaire • Commission de Surveillance du Secteur Financier (Luxembourg) • Host supervisors • EU supervisors • Bundesbank – Bafin (Germany) • Banca d’Italia (Italy) • Banco d’Espana (Spain) • Etc. • Other countries • BRSA (Turkey) • SEC (USA) • OFSI (Canada) • Japan FSA • Singapore • Etc.

  6. The regulatory environment The reporting • COREP • Group level : Belgium • Entity level : Belgium, France, Luxembourg • Subsidiary level : Italy, Austria, Germany, etc. • FINREP • Group level : no reporting required • Entity level : Belgium, France, Luxembourg • Subsidiary level : Italy, Austria, etc. • Others: • USA requirements, Solvency ratio, local requirements

  7. Main challenges • Cross regime requirements (IFRS, Basel II, Solvency II) • Cross country interpretation (within one single regime) • Cross business needs (Risk, Accounting, Business control, others ?) • Timeline for implementing CEBS update in the IT systems of the bank: • CEBS release March 200x • End of consultation June 200x • Application for March 200x+1 • Without taking into account the national extensions… All these should be integrated in • One IT system • One platform • One database

  8. Complexity ? Basel II IFRS Solvency II Pillar I Pillar III IFRS 7 F/S Pillar III Pillar I + notes Group Group Group Group BE (+group) BE BE FR LU BE FR LU BE FR LU BE FR LU

  9. Entité de booking X Systèmes comptables Systèmes de gestion Risque de marché Risque opérationnel FERMAT J-Port Fichiers DMV3 MAGNITUDE FERMAT Table données INPUT Résultats agrégés Risque Marché Résultats agrégés Risque Opérationnel Données Fonds Propres Résultats agrégés Comptables Moteur de calcul RWA Résultats détaillés Reporting réglementaire Résultats agrégés Risque Crédit Etats FINREP Etats COREP XBRL: the current situation

  10. XBRL: the current situation(the accounting environment) IFRS IFRS IFRS IFRS IFRS Crediop FSA IFRS IFRS No Conso (BE GAAP) IFRS US GAAP Lux GAAP Banking institutions Insurance companies Other

  11. STATUTORY BE CONSOLIDATED CONSO DHLD FR SAP Holding LU INTERNAL REPORTING MAGNITUDE COMMON PARAM CONSO DBB CONSO DCL EXTERNAL REPORTING DBB SPEC. LOCAL PARAM CONSO DBL DCL CHECK CHECK DBL VISUAL SCOPE MIS CONSO ESSBASE XBRL: the current situation(the accounting environment) FINREP XBRL COREP XBRL

  12. XBRL: the current situation • Many EU countries where Dexia is active are using XBRL as reporting language but • Not in all countries • Mostly presented and implemented as an additional burden • In Belgium an additional XBRL reporting is required for the Balance Sheet Office reporting (statutory accounts of approx 270.000 companies), National Bank of Belgium.

  13. XBRL: Advantages • Use XBRL as a tool for more harmonization, flexibility and gain of time both vertically and horizontally • We thus need: • XBRL at the beginning of the reporting processes (public, COREP, FINREP and internal) • Softwares that read XBRL • One integrated database (kind of Group taxonomy) • « One fits all »

  14. XBRL: Advantages • Used by credit departments • Used instead of xls on websites (like Microsoft, Monte dei Paschi di Siena, etc.) • Other regulatory reporting (like VAT and tax in NL, AML in Spain, etc.) • Internal reporting (reconciliation Consolidation and Risk databases) • Mapping with new regulatory requirements • Necessity to create a working group within the group with technical specialists and business specialists • Better coordination • Decrease of cost

  15. XBRL: Advantages • A potential integration tool for the group reporting • External : • Known and understood by all • May be the base of a worldwide reporting • May avoid repetitive reporting in different presentations, but with the same content to regulators and local authorities • Internal : • May be the base for internal reporting (consolidation) • May allow “drill-down” analysis with a good organisation of taxonomy • Will make the life easier for Financial Communication and members of the Boards when they compare the contribution of one company in the consolidated accounts with the financial statements published by a subsidiary in its country

  16. XBRL: Advantages • A potential integration tool for groups • Only one reporting, for internal and external reporting • Possibilities for people to move from one company to another • Advantage for managers to understand how transactions are recorded and the impact on the financial statements • Powerful tool for the controller and people from investor relations to analyse the contents of the financial statements, both in the group and sub – groups, including the local regulatory reporting • Use of IFRS and worldwide taxonomy may help groups to more easily integrate newly acquired subsidiaries

  17. XBRL: the issues • Regulatory interpretations Example • Collateral definition • Equity split • Counterparties • Calculations • Etc. • Software offer • COREP + FINREP • IFRS • Internal • Motivation of people (difficulty to see the benefits)

  18. How to solve it ? • Stronger CEBS policy, but also more communication to banks with regards to the XBRL benefits (XBRL should not be a cost and administrative burden) • Stronger banking industry involvement • Software providers needs to understand the banks’ real needs • One single definition of taxonomy

  19. Press release of April 2007: cooperation between US and EU, including regulatory matters BUT: This way ? Bundes bank FSA SGCB BdI CBFA etc. Or this way ? EU CEBS EU – US convergence SEC-FDIC

  20. Conclusion Within ONE group ONE tag ONE definition ONE validation/business rule ONE taxonomy ONE country ONE EU reporting ONE CEBS (FINREP-COREP) EU base reporting completed by additional country requirements => Need to follow the XBRL principles

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