FRSGlobal : Risk Analysis and Regulatory Reporting

Regulators in France

The regulatory authorities in the banking sector consist of the following organisations:

• Comité des établissements de credit et des entreprises d’investissement (Credit Institutions and Investment Firms Committee) (CECEI)
• La Commission Bancaire (The Banking Commission)

FRSGlobal in France

France has weathered the global economic crisis better than most European economies. This is due to the country’s resilient consumer and government spending, and lower exposure to the downturn in global demand.

French regulations are also being reformed with institutions having to file their FINREP (FINancial REPorting) and COREP (COmmon REPorting) statements with the General Secretariat of the Commission Bancaire) and supervisory arrangements have progressed well with systemic risks being better controlled. The recent unification of banking and insurance supervision and licensing in the Autorité de contrôle prudentiel (ACP) has been an important step andthe new institution ensures better consolidated supervision and helps to reduce systemic risk.

Another of the big challenges facing France is the initiative that is being developed by the General Secretariat of the Commission Bancaire to overhaul BAFI reporting. This initiative, known as Unified Financial Reporting System (SURFI) which is being conducted in close collaboration with the banking industry. The aim of this iniative is to harness the benefits of XML-XBRL technology to lighten institutions burdens that are faced in reporting to the Banque de France.

Regulatory Environment — France

Statutory

SURFI (non ECB reports)
Our reporting solution includes reports under SURFI, balance sheets, off-balance sheets, P&L reporting of initial and residual duration, loans granted breakdown by economic agent and residence and currency, derivative reporting, liability breakdown by economic agent and residence and currency, and money laundering.

Prudential

COREP
Our COREP application is integrated into the solution for France - finely tuned to meet local discretions. This type of reporting comprises of report templates and data processes or calculations related to capital charge and risk. It includes information on the common reporting requirements of the EBA with calculation of credit risk and market risk based on the standardised approach and the operational risk on the basic indicator approach.

Large Exposures Reporting
Financial institutions are required to provide large exposures reporting by beneficiary when the entire gross risk exceeds 10% of own funds. Our solution determines the beneficiary to be declared and gross and weighted credit risks are calculated in line with COREP rules (only standard approach).

Liquidity Reporting
Liquidity reporting in France is based on the standardised and advanced approaches. Credit institutions are required to calculate liquidity ratio and ratios relating to their forecast liquidity position called observation ratios on the basis of the French Franc and foreign currency accounts.

Statistical

SURFI (ECB reporting)
Our reporting solution includes reports under SURFI — all monetary reporting. For details please see the SURFI section

Taxation reports
Our solution covers the French regulatory reporting requirements for FICOBA2. All the reports are in line with the local tax administration’s revisions.

Securities reports
Our solution covers the securities reporting requirements for PROTIDE (quarterly reports for securities held by financial institution or on behalf of customer), OPCVM (quarterly reports on UCITS).

Transactional

Report Payments of Customers (RPC)

This type of reporting is mainly concerned with information on all customer transactions greater than 50,000 € with non-resident counterparties who do not belong to the SEPA zone. This is a mandatory monthly reporting that came into effect since January 2011.

Customers Report Transactions (CRT)
Financial intermediaries are required to report their cross border transactions with non residents and provide information on their branches, subsidiaries and affiliates overseas to feed the balance of payments statistics (income, financial services, direct investment and financial derivatives) and international investment position. These reports are required to be submitted on monthly or annual basis based at declaration level.

Customer Report payment Cards (CRC)
This type of reporting covers transactions made from cross border card payments. These statements cover all payments received or paid in transactions conducted face to face (transactions with a physical presence of cardholder at the point of transaction), all transactions of cash withdrawals (ATMs, cash withdrawals the counter and all remote transactions (internet, phone etc.). These reports are required to be submitted on monthly basis.

What’s coming Up — France

New and updated regulation from 2011

Comptes-rendus de Transaction (CRT)

As per Technical note DGS n°09-01, from January 2011 banks are required to submit new report on cross border operations of financial intermediaries (CRT).

CRT identifies all cross border operations of financial intermediaries and provides details of their economic purpose through various broken down values of balance of payments.

Banks reporting with monthly frequency are required to submit this report, 20 working days after end of January 2011. Banks reporting with annual frequency are required to submit this report, 60 working days after end of 2011.

Based on the Technical note DGS n°09-02 banks are required to submit information on direct investment in the form of equity capital transactions and property investments. The forms A1, A2, B1 and B2 are reported only when the investment or disinvestment is greater than 15 million €.

The deadline to deliver this report is 20 working days after the investment or disinvestment was done.

Technical note DGS n°09-03:

End 2011 onward banks are required to submit annual statements on direct investment stocks of financial intermediaries in their branches, subsidiaries and affiliates abroad. The statements should be submitted by any resident financial intermediary who directly holds at least 10% of the share capital of a non-resident company at the closing date of the annual statement.

The deadline to deliver this report is 120 workdays after end of year 2011.

Comptes-rendus de cartes (CRC) – deadline January 2015

The Bank of France has introduced new reports on cross-border card payments as per Technical note DGS n°10-01. These statements cover: all payments received or paid in transactions conducted face to face (transactions with a physical presence of cardholder at the point of transaction), all transactions of cash withdrawals (ATMs, cash withdrawals over the counter and all remote transactions such as internet, phone etc.) CRC is expected to be implemented by January 2012 or no later than January 2015.

CENTRA 2012 – deadline March 2012

CENTRA makes a census of all credit greater than 25000 € given to a counterparty with professional activity (no employee activity), this reporting will include new code post to make a distinction between healthy credit and doubtful cases. There is an accreditation period which is between 17 January 2012 and 15 March 2012 before going live, currently slated for 31 March 2012.

CEBS change over to EBA

The European Banking Authority (EBA) came into effect from 1 January 2011 and took over the responsibilities of Committee of European Banking Supervisors (CEBS). EBA is responsible for safeguarding public values such as stability of the financial system, transparency of markets and financial products, protection of depositors and investors wealth.

Financial Reporting (FINREP)

The aim of FINREP has always been to harmonise the financial reporting within the member states to improve comparability. However after implementation it has become apparent that the large number of national discretions has prevented to reach this goal. With the announced adjusted guidelines, the member states are obliged to apply at least the balance sheet and P&L statement and can choose out of 23 additional templates to apply. However CEBS insists that on all templates that the national regulator adopts, no changes should be made to its meaning or appearance.

Further it asks the member states for a firm commitment that the FINREP reporting will be the only consolidated financial reporting that an individual banking group has to provide to the regulator. Also the scope of consolidation will need to be aligned with the CRD.

Common Reporting (COREP)

In general the adoption of the COREP templates has been more straightforward between the member states than FINREP. However there have been still numerous differences. Here CEBS intends to align this further medium term with clearer definitions and tuning of the COREP templates.

Large Exposures is included in the COREP framework with the revised guidelines. It will be applicable as of 1st of January 2011, but only move into a binding core reporting framework as of 31st December 2012.

Read our data sheet for more information on the Large Exposure Reporting requirements

Concentration risk

Draft guidelines have been published on a revision of the concentration risk reporting. The most notable change is that reporting on concentration risk within an individual risk type (intra-risk) is considered to be insufficient. It pleas for reporting based on risk interaction (inter-risk) and would be related to credit, market, operational and liquidity risks.

Read the comment piece “CEBS pushes forward with reporting harmonisation agenda” for more information on the new requirements and their impact on financial institutions »

CEBS stress testing

Read the comment piece "CEBS stress testing" which looks at the results of the CEBS EU-wide stress testing exercise of July 2010, compares them with the previous US and UK FSA stress testing results, and looks at what the market can glean from them »

Solution - Système Unifié de Reporting Financier (SURFI)

The requirements of the FRSGlobal SURFI application are driven by the French Commission.

After 16 years of using what is considered both heavy and obsolete, BAFI reporting will be replaced by a lighter collection of data, SURFI (Système Unifié de Reporting Financier), with the first reports due on 30th June 2010. It will harmonise monetary and banking reporting; simplify or delete duplications; and take into account BCE's regulatory requirements. It will also use XBRL (Extensible Business Reporting Language) as a standard exchange language.

FRSGlobal commits to helping you be prepared for SURFI, by

• Having the SURFI solution available in January 2010
• Supporting its customers with the use of the testing platform, ONEGATE, at the Commission Bancaire as of its opening, which is foreseen end of February/beginning of March 2010

The FRSGlobal SURFI solution will be integrated into the French country solution and comprise:

• Report templates and
• Data processes or calculation

The key features of the FRSGlobal SURFI solution will address the demand by the regulators for:

• 73 templates
• 900 items from the chart of accounts
• 900 calculated items from the templates
• and 23 defined dimensional attributes (up to 7 levels of imbrications)

For more information on the requirements and timelines read the SURFI comment piece » (86.08 kB)

Solvency II

Solvency II is a fundamental and wide-ranging review of the capital adequacy regime for the European insurance industry. It represents both a challenge and an opportunity for European insurers. Globally it is scheduled to come into effect by 31 Dec 2012..

The project initiated by European Commission as an advancement to Solvency I is expected to enhance a revised set of EU-wide capital requirements and risk management standards..

The objective of new system is to introduce more sophisticated solvency requirements for insurers, in order to guarantee that they have sufficient capital to withstand adverse events, such as floods, storms or big car accidents..

Currently, EU solvency requirements covers insurance risks, whereas in future insurers would be required to hold capital also against market risk (e.g. a fall in the value of an insurer's investments), credit risk (e.g. when debt obligations are not met) and operational risk (e.g. malpractice or system failure). This will help to increase their financial soundness with implementation of sound economic risk management practices in insurance industry.

With a demand of more streamlined approach towards supervision, the new system would enable insurance groups to be supervised more efficiently, through a 'group supervisor' in the home country that would have specific responsibilities to be exercised in close cooperation with the relevant national supervisors.

The introduction of group supervisors would ensure that group-wide risks are not overlooked and would enable groups to operate more efficiently, while providing policyholders with a high level of protection. Groups that are sufficiently diversified may also be allowed to lower their capital requirements under certain conditions.

The Directive often referred as Basel II for insurers is based on a three pillar approach which is similar to the banking sector (Basle II) but adapted for insurance.

The new provisions of Solvency II will be adopted under the Lamfalussy process:

Level 1 – Solvency II directive includes overall framework principles developed by European Commission approved by European Parliament and European Council.

Level 2 –Includes introduction to implementation measures developed by European Commission and approved by European Insurance and Occupational Pensions Committee (EIOPC)

Level 3 –Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) will guide European Commission to enhance supervisory standards.

Level 4 –European Commission will finally monitor, Compile and enforce the regulation regime.

Maximum harmonization is assumed with the new Solvency II framework Directive. This means the European rules will be implemented all countries of the European Economic Area (i.e. the EU plus Iceland, Liechtenstein and Norway). The European Union’s Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) has recommended to the European Commission that Bermuda, Switzerland and Japan will be the first countries assessed for equivalence with EU insurance regulations under Solvency II.

Thus the new solvency II requirements with challenges and opportunities ahead will be more risk-sensitive and more sophisticated than in the past, thus enabling a better coverage of the real risks run by any particular insurer.