The implications of managing implementations of the European Union
AnaCredit which stands for Analytical Credit Datasets requires Financial Institutions to develop information on credits extended to legal entities.
While credit derivatives are currently excluded from the scope of this regulation, the loans and deposit data to be filed includes: a.) deposits (placed) other than reverse repurchase agreements; b.) overdrafts; c.) credit card debt d.) revolving credit other than overdrafts and credit card debt, e.) credit lines other than revolving credit; f.) reverse repurchase agreements, g.) trade receivables h.) financial leases and i.) other loans.
While on the surface this may seem relatively simple, there are nuances specific to each country’s central bank within the EU. From AxiomSL’s experience of implementing EU wide AnaCredit solutions, here is our voice of experience in preparing to meet the reporting requirements for Financial Institutions.
In most countries AnaCredit sets a threshold of credit extended and credit lines granted with a cumulative exposure of EUR 25,000 or greater for reporting purposes. However, countries like Ireland, Finland and Belgium have no thresholds and require Financial Institutions to report their entire credit book. Thus, depending on a bank’s AnaCredit regulatory exposure across the EU, raw data sets have to be checked for a threshold rule on a country by country basis.
More Attributes Please
Certain countries may require additional data elements to meet their unique needs for reporting. For instance, France requires some additional attributes to identify entrepreneurs. This creates yet another requirement besides the standard AnaCredit schema specified by the European Central Bank. In the Netherlands, there is a Logical Data Model comprising approximately 50 tables for Dutch and non-Dutch domiciled counterparties.
Some countries like Spain, Belgium and Austria have extended their current Central Credit Register solution to absorb the AnaCredit requirements.
Ireland on the other hand, has a different approach and wants Financial Institutions to categorise the role of every counterparty reported. Finland requires the addition of an extra table to cater for protection providers. Italy has added a Financial Instrument Data table to collect fees, expenses and annual percentage rate data. Germany requires two additional tables. The first is the Counterparty Identifier Change table and the second is the Counterparty Protection Received table.
While AnaCredit establishes a common credit reporting framework, these additions have to be dealt with for EU wide implementations.
There are differences in AnaCredit filing regimes across the EU. For instance, in France, there is a distinction of what is to be filed between French headquartered banks and their subsidiaries in other EU jurisdictions. Conversely, subsidiaries of banks operating in France that may or may not be domiciled within the EU have a different set of requirements when it comes to these filings.
And one can extend these ideas to every country in the EU to get a perspective on the divergence of collection rules depending on your domicile and operating status within a country.
The Implementer’s Dilemma
As we have had conversations with Financial Institutions who are preparing to meet AnaCredit requirements, their senior leadership and audit teams are beginning to ask the following questions:
How do we create a plan to manage the multiple requirements of this regulatory filing?
What datasets and sources have to be prepared in order to meet threshold and attribute requirements in each country?
Given our status as a Financial Institution in our home country and a bank holding company or branch in other jurisdictions, how do we plan to meet the multiple collection specifications?
Thus, having an EU Wide AnaCredit framework that caters to country thresholds, meets diverging reporting requirements and manages the delivery based on the status of a given Financial Institution in a country is the way forward. This helps with not only what is required today, but what may be needed in the future.
About AxiomSL and AnaCredit
AxiomSL combines deep industry expertise with an intelligent platform and applications to deliver financial regulatory reporting, liquidity, capital &credit, operations, trade & transactions and tax analytics. Our global footprint spans 70 regulators across 50 jurisdictions, serving financial institutions with more than $39 Trillion in Total Assets. Our expertise in implementing AnaCredit can be summarized as follows:
- Designed with the holistic EBA AnaCredit requirements in-mind, the interface layer allows a Financial Institution to map the data once and can be leveraged to deliver AnaCredit reporting across EU jurisdictions.
- Along with the Threshold Checks, the engine includes both data and business validations to perform an early assessment of data and give feedback to the source systems.
- Identifies the changes over the reporting cycles that are reported to each National Central Bank.
- Validations and delta processing are performed very efficiently to cater for clients with large volumes of data to be processed and reported.
- Drive reporting through in-built dashboards within the AxiomSL platform.
- Integrate seamlessly with clients’ disparate data sources and systems, both to ingest and disperse data.
- Developed closely with customers a strong MIS reporting to assist in the Op-Model. These MIS dashboards, provided with the solution, enhance data integrity and analysis.
- Successful track record in meeting AnaCredit requirements for financial institutions.