28/09/2017 – By Niall McGowan, Senior Regulatory Analyst, AxiomSL EMEA
AnaCredit (Analytical Credit Datasets) is the ECB initiative to create a harmonised reporting scheme of granular credit data from credit institutions in the Eurozone on a loan-by-loan basis. It is intended to be complementary to the Central Credit Registers (CCRs), which already exist in many European countries and are debtor-by-debtor focused. In addition, AnaCredit currently requires data on loans to legal entities (companies), while CCRs typically include data on natural persons (individuals). The threshold for reporting, determined by the cumulative exposure for a single counterparty both on and off-balance sheet, is EUR 25,000. National Central Banks (NCBs) also have discretion over this amount, with the Central Bank of Ireland and the National Bank of Belgium, for example, setting the local reporting threshold at zero euros.
Who is affected by AnaCredit?
AnaCredit is mandatory for all credit institutions located in a member state of the Eurozone. This also includes foreign branches of credit institutions, provided that these branches are resident in a reporting member state. A number of non-Eurozone countries have also indicated their intention to voluntarily opt-in to the AnaCredit Regulation. These countries are Bulgaria, the Czech Republic, Croatia, Hungary, Romania and Sweden.
With one year to go before the deadline for reporting of the complete dataset (both counterparty and credit), the coming months will see the beginning of the test phases in many jurisdictions. Indeed October 2017 marks the beginning of the test submission of counterparty reference data in both Ireland and Germany, with live counterparty data reporting scheduled from month end January 2018.
In a number of jurisdictions, the National Central Banks have taken the opportunity to overhaul the existing CCR framework to implement the AnaCredit requirements and enrich their data collection by adding additional attributes. Portugal, for example, increased the number of attributes collected in the existing CCR from 24 to approximately 180 and will now also include interest rate data.
Among the challenges facing reporting institutions is the level of granularity required over a large number of datasets, including counterparty data, loan level data as well as collateral and guarantor data. Despite the ECB’s goal of harmonising the data collection, the discretions granted to National Central Banks (NCBs) mean that disparities naturally exist between reporting agents from one Eurozone country to the next. The requirement to validate and reconcile granular data against aggregated CRD IV and supervisory reporting submissions will also prove challenging. Additionally, reporting agents will be required to demonstrate the data lineage and transparency mandated by the BCBS 239 requirements. This means that any reporting solution needs to be flexible enough to cater for the reporting needs of multiple jurisdictions with unprecedented levels of granularity in a transparent and compliant manner.
Short term tactical vs long term sustainable solutions
The AxiomSL AnaCredit solution allows completely disparate parts of the bank to combine, aggregate, validate and report highly varied datasets. AxiomSL’s enterprise-wide platform offers multijurisdictional capability of linking both ECB’s AnaCredit and the NCB’s local reporting requirements. With a strategic and flexible system that can take in multiple different databases in diverse formats, the platform brings all the dataset together in a coherent and reportable manner, whilst supporting the variations of the regulatory requirements.
With the anticipated expansion of AnaCredit to introduce an increased reporting population as well as increasing the scope of products and debtors under examination, reporting agents cannot afford to look to short term tactical solutions but rather to long term strategic and sustainable solutions. This will position firms to cater for any current or future regulatory reporting requirements both efficiently and cost effectively.
What should you do now?
Financial institutions should now examine their current data structure and reporting architecture and address any gaps to tackle the AnaCredit requirements efficiently and on time.
AxiomSL will support clients now and through any upcoming regulatory changes by adapting our AnaCredit data model as the ECB or the CCRs require, delivering all of the data aggregation, validation and reporting functionality needed to comply with the regulation.
Our drill down functionality also allows users to access the source data, and make manual adjustments if necessary. Once the client is satisfied with their reports, they can sign off on them prior to submission to the relevant domestic NCB. AxiomSL’s highly flexible and scalable AnaCredit solution allows users to load, process and submit large volumes or granular data required for the regulation, within the ECB’s aggressive timelines.
Click to find out more about AxiomSL’s AnaCredit solution.