Funding plan reporting: The surprise that awaits many banks

December 5, 2014 – By: Kassi Assamoi, Senior Manager, Policy and Strategy, EMEA

The introduction of a harmonized European approach to funding plan reporting next year marks a major change for the banking industry. So it is both surprising and alarming that some banks have yet to realize the new requirements will apply to them.

AxiomSL Inside View - Funding Plan ReportingFunding plan reporting is set to become a great deal more complicated in 2015, when the European Banking Authority’s (EBA) standardized definitions and templates are introduced for credit institutions across the European Union (EU). The new requirements oblige banks to provide their national competent authorities with more granular data than ever before about their assets and liabilities and plans for funding their capital requirements.

Many of the new definitions are based on the data that is required for Financial Reporting (FINREP). This has created confusion in the market, with some banks assuming that because they are not obliged to do FINREP, the funding plan requirements do not apply to them either. This is not the case: the new requirements will apply to most credit institutions across the EU, regardless of whether they do FINREP.

The EBA’s funding plan requirements will not be easy for anybody. The main challenge is that banks do not manage their business against the sort of balance sheet breakdown they are now being asked to provide to the regulator. This means they have a lot of data mapping and conversion work to do in order to populate the new templates. Once they have done this transformation to the EBA structure, banks must ensure they can still attest to the accuracy of their reports and sign off on them before submitting them to the regulator.

Banks that are doing FINREP are at a distinct advantage because they have already defined their data according to the FINREP structure on which the funding plan definitions are based. Those that are not doing FINREP have a lot more work to do. They must organize their data into FINREP-style structures before they can even begin to think about populating the new EBA templates. This is why it is so important that they realize their obligations immediately and start to prepare.

For many banks, news that they have to do funding plan reporting will be like waking up to a sack of coal on Christmas morning. However, it is better to discover now rather than waiting until the regulator gets in touch next year.

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AxiomSL’s solution supports all requirements to report on asset encumbrance, funding plans and additional liquidity monitoring metrics (ALMM). Our sophisticated XBRL functionality gives users the ability to access multiple iterations of the same taxonomy.

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