CRD IV and EBA reporting

CRD IV and EBA reportingBUSINESS & DECISIONRISK TECHNOLOGY CONSULTING

• Supervisory reporting requirements applicable to credit institutions as from 2014– EBA released ITS directly applicable without further transposition– Extended COREP and revisited FINREP reporting requirements– New XBRL taxonomy and data point model released at EBA level to further harmonize process

• COREP– Own funds and own funds requirements– Losses stemming from lending collateralized by immovable property– Information on large exposures– Leverage ratio– Liquidity reporting– Reporting on asset encumbrance– Forbearance and non performing exposures

• FINREP– Reporting on financial information

The regulatory contextHELICOPTER VIEW OF UPCOMING COMPLIANCE REQUIREMENTS

The actual challenge

• It does not happen at the credit department anymore• It becomes a true data challenge with increased focus on sourcing, quality and monitoring• Shared governance and increased involvement of finance and treasury to make it happen• Genuine enterprise-wide risk understanding, interpretation and measurement 'capabilities• Next to a solid reporting platform there is a need for increased assistance in business consulting and

downstream conversion / execution

BASEL III AS ACCELERATOR FOR NEEDED CHANGE

You might want to ask yourself…

• How will we be able to meet both the implementation guidelines and greater frequency and granularity of reporting?

• How are we going top cope with the significant additional reporting burden and can current infrastructure support it?

• What will the post-COREP risk and finance operating model look like?

• How will we capture the additional data required effectively and ensure appropriate controls have been applied around quality of content?

• What other regulatory changes do we need to manage in parallel?

UNREVEALING KEY CONSIDERATIONS ONCE YOU DIG A BIT DEEPER

• Regulatory interpretation– Although some of the reports are well known (i.e. risk classes, capital adequacy…) others are new

(i.e. liquidity reporting) and might lead to confusion in terms of meaning• Implementation timelines

– The Q1 2014 deadline provides a remaining implementation timeline of just a few months which should include all testing and assurance on the new process

• Risk and finance operating model– Risk and finance functions must work closely together to ensure deep understanding of the

underlying information and provide clarity over who signs off on data and reports

• Data availability and governance– The reporting function in finance will have greater responsibility on providing and attesting to risk

and other data contained in the COREP reports– Granularity of data in COREP may require additional fields to be created in source platforms– Consistent data definition across increased landscape will be required– Greater reconciliation and other control measures will be needed

Dependencies…THAT ARE NOT BEING ADDRESSED WITH A TECHNOLOGY SOLUTION

• True complementarity and leverage of a long-lasting relationship with reporting solution vendors for both banking and insurance market across different levels of collaboration

• The combined service offering of software vendors and B&D allows customers to take advantage of our consulting services beyond reporting and ramp up the chain– Conducting readiness assessments with tools developed over a number of years– Expertise in development of reporting data models and reporting solutions– Data acquisition capabilities to merge data from multiple disparate systems with cleansing and

transformation– Training and change management expertise to embed process changes in the business– Specific regulatory, technology, data and project leadership expertise to lead and support delivery

Why considering another service provider?COMPLEMENTING SERVICE OFFERINGS ALLOW A 360° APPROACH

• The implementation challenges are significant and time to implement extremely short

• Informed decision-making on the preferred implementation approach as well as identification of data challenges and a robust technology solution will allow you to optimize your implementation

• There are a range of non-competing and highly complementary services to be delivered right in between your preferred systems integrator and your reporting solution vendor.

• A “wait and see” approach is likely to negatively impact your ultimate ability to comply in an area of increased regulatory complexity

• We´d be delighted to meet you person to deepen some considerations and challenge your present approach to compliance

ConclusionCLOSING THOUGHTS AND FINAL RECOMMENDATION

• Risk-specialists with emphasis on– Broad business domain understanding

(Financial Services, Banking, Insurance)– Educated and well-trained business knowledge on

risk management and regulatory frameworks– Business intelligence concepts, methodologies

and tools (data warehousing and data governance)

– Both project management experience and certification (Prince II)

– Understanding of banking technology solutions and most common software packages

• backed by +2000 BI profiles throughout the B&D group

A glimpse at our delivery consultantsA RISK COMPETENCE CENTER IN THE HEART OF AN INTEGRATOR

Data extract

• Multiple source systems• Internal data sets• External data

requirements for Basel III calculation and internal reporting needs

Collection

• ETL - collect and transform the required data

• Store for processing in single location in logical data model

• Data quality and governance

Preparation

• Data aggregation in a Basel III context

• Setting up of financial information integration marts

Calculation

• Calculation of capital requirements

• Aggregation• Calculation of new

capital ratios

Reporting

• Existing financial reporting

• MIS and financial control• Legal reporting• XBRL conversion

What makes us different?INCREMENTAL VALUE CONSULTING APPROACH ACROSS THE FULL CHAIN

Gap analysis

• Scoping of assignment• Business review• Approach and expected

outcome• Internal organization• Regulatory and

business context

Inventory

• Governance, processes and controls

• System, standards and technologies

• Existing thoughts re B3 architecture

• Inventory of risks and K ratios

Target

• Target ratio calculation and/or aggregation approach

• Target organization (RACI matrix)

• Reporting (internal and legal) and financial control

Scenarios

• Strategic vs. tactical solution and leverage potential

• Project risks; cost vs. benefits assessment

• Technology choice and rationale

Action plan

• Preferred scenario roll-out plan

• Project initiation phase (PRINCE II)

• Project and solution KPI's• Maintenance, handover

and production

The EMEA Risk PracticeA ONE-STOP SERVICE PROVIDER

Discovery Phase

Gap AnalysisMaster Plan

Solution delivery Phase 0 … phase n Support

Introduction to our capabilities and cost/benefits

discussion

Solution Architecture

Business ProcessDesign

Information Management

Technical Architecture

Application Architecture

Solution Delivery

Infrastructure and applications

ETL and reconciliation

ERM Risk engines

Training, testing and QA

Disparate data sources

Organization & processes

Inadequate applications

Data governance

Analytics & reporting

Solutions

Post deployment support and

services to sustain success

Understand what is in place, what has been realized and

road map

Business & Decision provide technology and services to create capabilities required by the regulation and beyond based on the

client specific needs

Ongoing support and optimization in order to facilitate deployment

Maintenance

Perform gap analysis,

interviews across dept., formulate

and quantify needs, design solution and

create a master plan for delivery

Challenges

Find out whether and where B&D can add value

Engagement

Follow us!We would be delighted to help you address the challenge

Benoît BerckManager Banking RiskEMEA Risk Practice [email protected] +32 (0)491 86 89 00

Philippe MeyerDirectorEMEA Risk Practice [email protected]+32 (0)476 97 67 82