OVERVIEW & KEY OBSERVATIONS
The final version of the AnaCredit Regulation on the collection of granular credit and credit risk data was published on 1st June. It includes references to the related amending decision on the organisation of preparatory measures for the collection of granular credit data by the European Systems of Central Banks (ESCB).
The regulation concerns credit granted by credit institutions to legal entities and is only in its first stage. The scope of granular reporting may be extended in the future.
It outlines the reporting requirements, provides recommendations for developing a long-term framework for the collection of credit data based on harmonised ECB statistical reporting requirements and defines the reporting population and scope. Essentially, the regulation explains how, when and what the impacted population will need to report to the relevant National Central Bank which in turn transmits this data to the European Central Bank.
WHAT IS AnaCredit?
AnaCredit stands for analytical credit datasets. It is a project launched by the ECB in 2011 to set up a dataset containing detailed information on individual bank loans in (at least for the time being) the euro area, harmonised across all Member States, thus ensuring more comparability and improving the statistical information basis for the Eurosystem in a significant way.
The initial aim of the regulation is to deliver the necessary additional information for monetary policy and financial stability tasks. At a later stage, additional requirements for banking supervision may be considered as well.
WHO IS IN SCOPE?
The actual reporting population subject to the AnaCredit regulation is defined in Article 3 of the same regulation and includes both the resident credit institutions and resident foreign branches of credit institutions whose currency is the euro.
In section 4.2. of its Explanatory Note on the reporting population, the ECB confirms that the scope of data collection covers data on credits granted or serviced by:
Credit institutions resident in a euro area Member State;
Branches of credit institutions, provided that the branches are resident in a euro area Member State;
Any foreign branch controlled by the reporting agent, regardless of whether or not the foreign branch is resident in a euro area Member State.
According to section 4.5. of the Core Reporting Requirements in the ECB’s Explanatory Note, credit data needs to be reported if it is held by an individual entity whose total commitment amount for all relevant instruments, equals or exceeds €25,000. Each non-performing instrument where payment is in arrears must be reported until it is redeemed in full or written off, provided the total commitment amount for the instrument exceeds €100, irrespective of the total commitment amount for all instruments used by the debtor.
These values may still change and discussions may continue. This means that any tool for meeting AnaCredit requirements must allow for parameterisation of the reporting threshold.
WHAT TYPE OF DATA SHOULD BE REPORTED?
AnaCredit will require the reporting of over 100 data points for each exposure in the scope. This figure may increase with the introduction of subsequent stages in the regulation.
The current data points cover many aspects of the exposure, including:
Data related to the counterparty
- E.g. the legal name of the counterparty, its address or legal entity identifier (LEI)) are recorded along with other data characterising the counterparties (the legal form, the type of entity or the institutional sector)
Data related to the instrument
- E.g. type of instruments, currency, non-performing status, interest rate type, payment frequency, etc
Data related to the collateral or other mitigation techniques
- E.g. credit derivatives, guarantors, financial collateral received
- Such as the loan loss provision or the accounting classification of the instrument
Institutions should start the implementation immediately. Adopting the regulation provides greater clarity through higher quality data and enables institutions to prepare for the use of a harmonised set of concepts and definitions. Identifying the need for action and outlining targets of what your company wants to achieve in terms of its AnaCredit reporting, are central considerations that should be addressed early on.
The first dataset needs to be ready for testing by 28 January 2018
Official submission of credit institutions to the National Central Bank by March 2018
National Supervisors will have to deliver the first complete AnaCredit report to the ECB by September 2018
HOW CAN BRSANALYTICS HELP?
We can align the AnaCredit dataset with the other regulatory reporting modules we offer to provide a holistic solution aimed at enhancing and satisfying the data management, efficient risk data aggregation and complete regulatory reporting requirements of your organisation.