Reporting Burden too light? Here comes AnaCredit
The European System of Central Banks (ESCB) is finalising plans for its Analytical Credit Dataset (AnaCredit), a centralised database of credit exposures on a loan-by-loan basis. The intention is to enable the work of the SSM by providing a holistic, accurate and timely view of Eurozone credit exposures, facilitating both micro- and macro-supervision. National credit registers (such as Spain’s CIBRE) will request an extensive dataset from all credit institutions on loans, derivatives and off-balance sheet exposures. The Eurozone has a relatively high proportion of SME activity, as a result the reporting threshold will be set low at €25,000; although derogations to reduce the reporting burden on the smallest credit institutions are likely. Reporting requirements are expected to be implemented in three phases; end-2017, loan-by-loan data on credit granted to legal entities; mid-2019, consolidated credit data on significant institutions supervised by the ECB; mid-2020, anonymised data on credit granted to sole proprietors and on mortgage loans to households. Reporting frequency is yet to be established, but is likely to follow the CIBRE’s quarterly format. Discussions indicate that the reports will require 100-150 data points, with both qualitative and quantitative credit data on individual borrowers. The reports are likely to include data on the following aspects: lender/borrower attributes,exposure features,valuation measures,risk measures,loss measures, balance sheet status; it is clear that AnaCredit reporting will not be a simple copy/paste from existing reporting templates. A draft Regulation to establish AnaCredit is currently in preparation; it is expected to be submitted to the ECB Governing Council under ECB/2012/24, the legal basis for the ECB’s collection of statistics. Countries within the EU, but outside the Eurozone such as the UK, are invited to join the AnaCredit system; to date, Denmark and Sweden have indicated their intention to do so.
Although there are many details to be resolved and the full-implementation timeline is long, it would be foolish to understate the challenge presented by this new reporting requirement. AnaCredit will have a significant impact on smaller financial institutions, who have until now been relatively unaffected by the panoply of reporting regulations. For those larger institutions already (or soon to be) subject to the requirements of EMIR, MiFID I and II, Basel III, AIFMD, BCBS 239 et al., AnaCredit should be seen as an opportunity to aggregate, integrate and de-segregate multiple reporting systems and processes. AnaCredit is line with Regulators’ increasing reliance on quantitative analysis and their consequent demand for highly granular data; firms must respond by implementing enterprise-wide processes for data governance, aggregation and reporting automation.