07 Dec Thinking strategically about European statistical disclosures
December 7, 2015 – By David Attenborough, Business Development Manager, EMEA
The European Central Bank’s (ECB) plans for greater harmonization of regulatory reporting are starting to bear fruit. However, there will always be local variations and domestic statistical disclosures, which banks must also take into consideration when thinking strategically about regulatory reporting in Europe.
Many banks currently rely on regulatory calculation and reporting tools that have been designed primarily to address European-wide requirements, such as Common Reporting (COREP), Financial Reporting (FINREP) and the Liquidity Coverage Ratio (LCR). These tools may get the job done for European Banking Authority (EBA) regulations, but their limitations become quickly apparent when banks also attempt to leverage them for non-EBA requirements or local variations of the EBA’s rules.
Banks that have been down this route have often discovered they have access to very few templates other than those required by the EBA, and adding new templates is a slow and complicated process. This is because new templates can only be added to their reporting tool by issuing a software release, which requires banks to undertake regression testing. This process must be repeated every time a regulator amends one of its report templates. When banks do receive the templates, they often find they have to populate them manually.
The situation faced by many banks is further complicated by the fact their regulatory calculation and reporting tool cannot support internal management reporting. In effect, this means the banks are working with an EBA reporting tool which can, with difficulty, be used for domestic statistical disclosures and which must be connected to a separate business intelligence tool in order to produce internal reports. This is extremely inefficient.
So what is the alternative? Banks can benefit from far greater efficiency by working with a vendor that not only supports the requirements of the EBA, but also provides a wide selection of off-the-shelf templates for local statistical reporting requirements throughout Europe and for local variations of the EBA’s requirements.
Instead of being reliant on software releases to get their hands on new report templates, banks should choose a regulatory calculation and reporting platform that separates the regulatory functionality and core platform functionality. This will mean new templates can be added quickly without impacting the entire platform, leading to a much shorter time to market.
Finally, banks should ensure the platform they use to manage their regulatory reporting in Europe also offers native support for internal reporting. Not only will this help to contain infrastructure costs by eliminating the need for an external business intelligence tool; it will also ensure consistency between the data in internal and regulatory reports. This is a key requirement of the Basel Committee for Banking Supervision’s 239 (BCBS 239) Principles for Effective Risk Data Aggregation and Risk Reporting.
To guarantee the success of their regulatory reporting projects in Europe, banks should equip themselves with a single platform that addresses the requirements of the EBA and domestic regulators, and also produces internal management reports.