FRSGlobal : Risk Analysis and Regulatory Reporting

Regulators in Iceland

The supervisory and regulatory framework in Iceland consists of:

• Central Bank of Iceland
• Financial Supervision Authority, Iceland (FME)

FRSGlobal in Iceland

The economy of Iceland was adversely affected during the global financial crisis in 2008. The collapse of the banking sector and rapid depreciation of the Icelandic krona brought an unprecedented economic and financial crisis to the nation.

To manage systematic risks and create confidence among financial institutions, it is important to reduce uncertainty in debt and capital positions. The central bank is taking several measures such as capital accounts liberalisation and stringent financial supervision to rebuild the Icelandic financial system. With aim of financial stability, the central bank and the FSA, Iceland are actively working together to address weakness in regulations related to liquidity, debt structure, large exposures etc.

Iceland is a member of European Economic Area (EEA). Within the framework of the EEA, Iceland has an opportunity to align with EU statements on foreign affairs.

To get in line with standards laid down within the European System of Financial Supervision (ESFS), Iceland has applied for membership to the European Union (EU). The country is already following European standards for submission of financial and prudential reports.

Regulatory Environment — Iceland

Statutory

Financial reporting (FINREP)
FINREP developed by the European Banking Authority, EBA (formerly CEBS), has been fully implemented in Iceland. Credit institutions are required to submit FINREP reports on solo and consolidated basis. These reports include information on balance sheet and income statement based on the IFRS framework. In addition there are a series of breakdown reports on derivatives, loans and advances, loan commitments, financial guarantees etc. required to be reported on quarterly basis.

Prudential

Capital adequacy reporting (COREP)
Iceland has adopted Basel II for assessment of capital adequacy positions and prudential risk supervision since 2007. Capital adequacy reporting in Iceland is based on the COREP framework designed by the EBA. The frequency of reporting is monthly for securities companies, other financial institutions are required to submit these reports on quarterly basis to the Financial Services Authority (FME).

Large exposures reporting
Any exposures incurred by financial institutions to individual customers or group of connected parties, exceeding the threshold limit equal to or more than 10 percent of net capital are required to be reported to the FSA on quarterly basis.

Liquidity risk reporting
Credit institutions are required to submit monthly reports on liquidity ratios to the Central bank. These reports are related to calculation of liquidity ratios of assets and liabilities categorized by type, maturity, and risk. In addition, consolidated reports on liquidity positions are required by the FME on regular basis. These reports provide information on secured assets and cash as a percentage of total deposits.

Statistical

Balance sheet statistics reporting
Balance sheet statistics reporting includes reports on assets, liabilities and equity statements categorized by sector, currency and maturities etc. to be submitted to the Central bank for supervisory purposes on monthly basis.

Transactional

Balance of Payments reporting
BoP reporting is concerned with information on all international transactions between Icelandic residents and non residents. The Central bank collects reports on monthly basis on external payments, foreign cash transactions, deposits and receipts from non residents etc.