​​​​Reporting initiatives: please streamline the reporting processes​

Updated: October 2019

PROPOSED SOLUTIONS AND ACTIONS 

Harmonisation of reporting processes and requirements: 

• To enhance the reporting process for European banks, the reporting initiatives BIRD and IReF have to be streamlined across Europe and shall be mandatory and applicable for all reports and reporting streams within the EU. 
• ESBG sees the need for an EU-wide steering body to align current and future reporting requirements and reporting initiatives of all European authorities that have the power to require reports from the banks located in Europe. This central steering body shall also be composed of representatives and experts of the banking sector (similar to the EBA Banking Stakeholder Group). The alignment of reporting initiatives shall guarantee that newly established reporting requirements by one authority do not interfere with or deviate from those of other authorities. 
• A sustainable reporting environment requires homogenous definitions and processes for all reporting requirements (in particular for supervisory, resolution and statistical reporting). 

Enhanced transparency:

• In order to proactively support higher data quality and to enhance transparency in the supervisory review and evaluation process (SREP), ESBG requests more details on supervisory tools (such as the EGDQ Data Quality Dashboard). In ESBG’s view, the EGDQ shows a lack of details (governance, responsibilities, etc.). Therefore, ESBG is demanding more information on what is actually measured by the EGDQ Data Quality Dashboard and how the measurement is being conducted. Furthermore, ESBG requires further clarification regarding the escalation process, fines and potential capital add-ons, etc. 
• Furthermore, ESBG advocates regular cost-benefit monitoring of all reporting requirements. These monitoring activities shall assess whether the reporting costs incurred by institutions are (still) proportionate with regard to the benefits delivered by the reporting requirements and data. 

Prioritisation: 

• ESBG recommends a 3-year reporting plan. Such a plan shall schedule regulatory initiative for all European authorities and provide banks with a comprehensive overview on upcoming initiatives to ensure that banks have the time, resources and budget needed to properly implement and comply with new reporting requirements. In addition, the future strategy of all the reporting initiatives needs to be validated by experts, with the expertise that is needed to evaluate prioritisation of different new requirements, the benefits resulting from the new requirements (with focus on economics and sustainability of the banking industry) as well as the realistic timeframe to introduce such new reporting requirements. 
• Finally, a sustainable reporting environment requires the stabilisation of the existing reporting requirements. In this regard, ESBG urges the authorities to take into account the institutions’ efforts to achieve stability before introducing new reporting obligations.

​ESBG would appreciate a better-coordinated reporting environment and the establishment of a stable and quality-improved reporting across the EU. 

ESBG values all reporting initiatives that lead to a reduction of burden for the banking industry and encourages European decision-makers to look more into such possibilities in the future. It would be a win-win situation for both banks and authorities if the reporting framework could be designed more efficiently. 

We also invite decision-makers to always bear the principle of proportionality in mind. It should be used to identify those banks which are smaller, or non-complex, and then assess how the burden could be reduced compared with other banks. This would actually help create a level playing field. 

IDENTIFIED CONCERNS 

European banks are facing substantial reporting burden driven by the following situations in the reporting environment:

• There are more and more regulatory authorities on the European level; • Newly introduced reporting requirements are not aligned between the authorities (e.g. SRB’s reporting for resolution plans (MREL) and ESMA’s securitisation report); 
• There is no alignment between the statistical and supervisory views in terms of data management and requests; 
• There is no central steering of new reporting requirements on the level of the authorities; • Banks face tight schedules to implement new reporting requirements; 
• Due to the ongoing introduction of new reporting obligations, the stabilisation of existing reports is hardly achievable; 
• Heterogeneous reporting requirements lead to burdensome efforts and high costs for banks and increase the risk to create low quality or erroneous data; Additional reporting requirements from NCAs further contribute to the complexity in the reporting environment and are too excessive in certain cases; 
• Transparency is missing in terms of responsibilities and governance by the ECB. The scope of banking groups is not well defined – e.g. group view vs local subgroup view, in case the parent institution is located in another country. Further, there is no sufficient information on how the ECB measures the data and Outcome reporting quality via the EGDQ Data Quality Dashboard. Furthermore, the outcome and usage of the data quality assessments are not known. Banks are producing and submitting reports, not knowing how and for what purpose the information is further being used for by the authorities.

WHY POLICYMAKERS SHOULD ACT

In general, ESBG appreciates the authorities’ realisation that the reporting framework could be improved and that they (mainly ECB and EBA) started to establish various data- and reporting initiatives within the different reporting areas (supervisory and statistical reporting). 

We hope that the collaboration between the different authorities will be deepened and that the reporting initiatives, provided that they are properly designed, will become a reality. Expansion of the scope of authorities (e.g. with the SRB) in this collaboration would be highly welcomed. Especially small and non-complex institutions have been overwhelmed with the numerous additional reporting requirements in recent years. Many institutions, large and small, have made the experience that the same data needed to be reported more than once. 

ESBG is fully supportive of working together with the EU authorities in order to make the necessary improvements in the area of reporting.

BACKGROUND 

European banks must generate a vast amount of data to comply with a variety of reporting obligations, ranging from financial and supervisory reporting to reporting for resolution plans (MREL) as well as statistical reporting. These reporting requirements are the results of requests for information/data of a wide range of European authorities, such as the European Banking Authority (EBA), the European Central Bank (ECB), the Single Resolution Board (SRB), national competent authorities (NCA) and other authorities/institutions with the power to require reports from the banking industry. 

In order to streamline these reporting requirements and processes across Europe, some European authorities have started various data and reporting initiatives within some specific reporting areas: 

• Bank’s Integrated Reporting Dictionary (BIRD) – a common glossary on reporting attributes by the ESCB for supervisory and statistical reports (currently voluntarily); 
• Integrated Reporting Framework (IReF) – a common reporting data model by the ESCB for statistical reports in the Euro Area; 
• EBA’s Data Point Model – an EU-wide data model for supervisory and resolution reporting. 

Furthermore, the ECB’s Expert Group on Data Quality (EGDQ) established a Data Quality Dashboard to monitor the accuracy, completeness and punctuality of supervisory reports. It needs to be expected, that in the near future, the results of this reporting dashboard are going to have a substantial impact for the bank’s assessment in the supervisory review and evaluation process (SREP), possibly leading to additional capital requirements.