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Evolution of COREP and FINREP

Presented at the:

IX European Banking SupervisorsXBRL Workshop & TutorialIn: ParisOn: 30th September 2008

By: Wolfgang StrohbachMember of CEBS XBRL Network

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Outline

1. CEBS???

2. FINREP vs. COREP

3. EU-wide reporting formats

4. Streamlining & Harmonization project

5. One-entry point

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Policy and implementation

measures

Legislation

Level 1: The Commission European Parliament Council

Level 2: European Banking Committee

Convergence and supervisory cooperation

1. CEBS in the Lamfalussy process: 3 levels

Level 3: CEBS

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1. CEBS in the EU: our role

EBC¹EFCC¹

CEBS²CEIOPS3

CESR3

¹Finance ministries (FST also central banks)²Supervisors and Central Banks³Supervisors

Council European Commission

European Parliament

FSC¹

European Central Bank (ECB)

EFC-FST¹ Economic and MonetaryAffairs Committee (ECON)

Banking Supervision Committee (BSC)

Level-3 coordination

Advice/accountability coordination

Co-operation

IWCFC3

EBC European Banking CommitteeEFCC European Financial Conglomerates CommitteeEFC Economic and Financial CommitteeFSC Financial Services CommitteeFST Financial Stability TableIWCFC Interim Working Committee on Financial Conglomerates

Accountability

Inter-Institutional Monitoring Group

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2. FINREP (Financial Reporting)

What is:

consolidated financial information collected by national supervisors and based on endorsed IFRSs.

First released:

December 2006

Objective:

Increase comparability of financial information delivered by banks to supervisors (convergence)

Structure:

– core information

– non-core information

– additional quantitative and qualitative information (national discretion)

Implementation in EU:

– 21 countries

– mainly core information

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2. COREP (Common Reporting)

What is:

Solo and consolidated prudential information collected by national supervisors and based on CRD (Basel II)

Objective:

• develop a common language for communication in the context of a common European framework (convergence)

First released:

January 2006

Structure:

– core information (homogen)

– standardised supplemental information (flexible)

Implementation in EU:

– 27 countries

– 2/3 of content

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2. COREP Basel II

ThreePillars

I – Capital requirements

II - Supervisory review process

III - Market discipline

Risk weightedassets

Definition ofcapital

Credit riskOperational

riskMarketrisks

Standardised Approach

InternalRatings-based

Approach

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3. Assessment Study (2007)COREP FINREP

Outcome of assessment study

•Significant level of commonality, high in core templates

•More burdensome than US Basel II reports.

•High commonality in core templates

•Low use of non-core templates

Sources for the exercise•Commonality of data

•User-test

•Commonality of data

•User-test

•Analysis public Financial St.

Reasons for low commonality national discretions IFRS vs. National GAAP

Consequences

3 operational networks on reporting:

•FINREP network

•COREP network

•XBRL network

Harmonization & Streamlining project

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3. EU-wide reporting format

“move towards EU-wide reporting formats so as to have a single set of data requirements and reporting

dates.” (ECOFIN conclusions)

FINREP

COREP

EU-wide reporting formats

Hard convergenceHarmonised but flexible

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3. Hard convergence

•Scope:

IAS/IFRS: consolidated and sub-consolidated reports (FINREP)

Pillar 1: consolidated, sub-consolidated and solo reports (COREP)

•Hard convergence on data definitions:

Use of different accounting frameworks (IFRS vs. National GAAP)

Different CRD implementationCall for Advice on National Discretions (advise by CEBS to EU Com) Implementation Questions (publication on CEBS’ website)CRD Transposition Questions (EU Commission)

Differences in supervisory approachesEGFI QueriesSeminars and workshops

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4. Streamlining project

•Maximum data model: so as no additional data requirements on financial reporting and Pillar 1 will be imposed

•Based on need-to-know basis for supervisory purposes:

• the ongoing user-test on FINREP and COREP will determine the use and the relevance of the data requirements

• Seminars and workshops on the use on FINREP and COREP data will provide detailed information

•Data models structured in two layers: core and non-core

• Core: data required by all supervisory authorities

• Non-core: adapted to national needs, either for domestic-operating or entities included in cross-border groups (for the latter, the banks will build the data model by aggregations of national data models or by decision within a college of supervisors)

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4. Timeline

2008 2009 2010 2011 2012

Reporting dates

COREP

FINREP*

Design phaseConsultation phaseDecision phaseTransposition phaseApplication phase

COREP

FINREP*

*FINREP dates are tentative and are influenced by other factors, as JEGR

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4. Graphically…

Reporting before… and after…

Supervisor 1

Supervisor 3

Supervisor 2

Different templates and definitions Common templates and definitionsSeveral formats Single formatDifferent technologies XBRL recommended

Supervisor 1

Supervisor 2

Supervisor 3

XBRL

Group A

Group B

Group C

Group A, B, CCommon

framework

XBRL

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5. Analysis of simplified reporting procedures

• Decentralised model vs. one entry point approach

• Analysis of costs and benefits for cross-border groups and national authorities

• Analysis of pre-requisites for one entry point approach

FSA A

FSA B

FSA C

Bank X Bank X

FSA A

FSA B

FSA C

Database

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Questions?

Thank you!

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Contacts:

CEBSwww.c-ebs.org

www.corep.info

www.finrep.info

Wolfgang Strohbach:wolfgang.strohbach@c-ebs.org