SURFI Unified FInancial Reporting System Towards an harmonized reporting framework with XBRL

Paris,24 June 2009

Danièle NOUY, Secretary General of the Commission bancaire

SURFIUnified FInancial Reporting System

Towards an harmonized reportingframework with XBRL

19th XBRL International Conference

Secrétariat Général de la Commission bancaire

Paris, 24 June 2009SURFI : Towards an harmonized reporting framewor with XBRLBanque de France – Secrétariat Général de la Commission bancaire

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Outline

1. Harmonizing banks’ supervisory reporting in Europe

2. Building a common reporting framework: Banque de France’s SURFI project

3. XBRL: a powerful tool to deliver more transparency


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1. Harmonizing banks’ reporting in Europe

In 2005, CEBS decided to adopt a common reporting framework for COREP and FINREP

COREP: COmmon REPorting for a common solvency ratio. Following the adoption of Basel II, implemented in Europe by the CRD Directives, CEBS elaborated a common reporting framework, and published it in January 2006.

FINREP: FINancial REPorting for common « supervisory financial » reporting for banks consolidated accounts in IFRS; CEBS published the templates in December 2005.

In France, the first such reports were received by the Commission bancaire in June 2007.


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The benefits of a common reporting framework were the following:

It contributes to the harmonization of supervisory practices in Europe and, as such, helps developing a common supervisory culture;

It reduces the regulatory burden and the costs of reporting for cross-border banks;

It improves the quality of information from reporting entities;

It allows an easier exchange of information between supervisors.


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… And CEBS decided to recommend the use of XBRL for this common reporting, because:

XBRL allows to build a common data dictionary based on the European legislation;

With XBRL taxonomies, EU supervisors share common definition, in a common language, using the same IT technology and improving data quality;

Also, XBRL – through its extensibility – provides the necessary flexibility to adapt the data to national markets characteristics, with the risk of losing comparability if used extensively.

In the medium-term, XBRL will allow supervisors to collect information in a decentralized way, and still benefit from the information-sharing, like in a centralized data base.


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• Reporting before… …and after

EU GroupReporting

Supervisor 1

Supervisor 3

Supervisor 2

-Various data streams -Common framework-Different reporting standards -Single format-Manual processes -Automated data collection

EU GroupReporting

Supervisor 1

Supervisor 2

Supervisor 3

XBRL

XBRL



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But the road to full harmonization is long, since technology alone cannot ensure identical definitions

A first step was reached in 2007:

The technology was adopted by 12 countries in Europe using, as a basis, the common taxonomy provided by CEBS;

… But the extensibility was used in a too “extensive” way, resulting in insufficient harmonization for cross-border groups.

CEBS decided in 2008 to review the framework in order to further reduce the regulatory burden by:

Streamlining COREP and FINREP, and Being more prescriptive, to enhance the harmonization.

The new framework, currently under consultation for FINREP, will be introduced in 2012.


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1. Harmonizing bank’ supervisory reporting in Europe




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2. Building a common reporting framework : SURFI project

Building on CEBS’ recommendation, the Commission bancaire is changing its data collecting system, using XBRL

First step: implementing COREP and FINREP, which implied:

to produce the French extension of the CEBS taxonomies,

to limit as much as possible national specificities and the resulting reporting burden for cross-border banks,

to manage, at the same time, two different sets of data, the former traditional database BAFI and the COFINREP data in XBRL.

Second step: MODEC a project for the civil status data collection

It will offer a state-of-the-art, interactive software dedicated to civil status processes.

Third step: the SURFI project : it is about modernizing and streamlining regulatory and statistical data collection from banks.


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The Commission bancaire collects both supervisory and statistical data from financial institutions, acting for all departments of Banque de France

Main features of the present DATA collection system: Reporting entities: MFIs (Monetary Financial Institutions)

according to the French law, and investment firms; Data coverage: Data for both statistical and prudential purposes,

but balance of payments data partially out of the scope; Same data base, but limited harmonization of concepts and

reporting formats with, as a result, double collection of a number of data;

Technical side: a database system based on a proprietary format developed in 1993, therefore somewhat obsolete.


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Building on COREP and FINREP’s previous experience, SURFI was launched by mid 2007

Main objectives of the project:

To harmonize data collection for supervisory and statistical purposes, in order to eliminate double collection of data;

To reduce the reporting burden by streamlining the reporting requirements, leading to a reduction of about 25 % of collected data;

To take fully into account the ECB statistical revisions and fully articulate both projects’ schedules.

In a nutshell: To switch from a template-based approach, to a data-based

approach, benefiting from our XBRL expertise and experience from COREP and FINREP.


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After two years of intense work of Banque de France’s statisticians and supervisors as well as technical discussions with the industry, the result is a new information system, called SURFI, for Unified FInancial Reporting System

UNIFIED is the key concept:

Data collected for statisticians and supervisors have been harmonized, for the data collected on a solo basis, since monetary statistics are based on solo accounts,

Each data is collected once and serves different purposes,

… And it is unified, because COREP and FINREP will join the future database.

The new reporting system is scheduled to start on 30 June 2010.


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After COREP and FINREP, SURFI is another milestone in the harmonization and reduction of reporting

The idea that each data should be able to address all kinds of needs is at the heart of the process of reducing the reporting burden for the industry:

The European Central Bank and CEBS have created a joint working group with a medium-term perspective in order to prepare the next steps.

This Joint Expert Group on Reconciliation aims at finding additional bridges between statistical and prudential needs, in order to further reconcile both sets of concepts and definitions.

As a first step, a data dictionary has been produced in order to compile different concepts et definitions.

Although the exercise is highly challenging, and will take time, it clearly represents a useful step towards an harmonization of reporting.


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The SURFI taxonomy which is almost completed (the final version will be issued before the end of the month) presents the following characteristics:

A large taxonomy to address different needs:

About 2400 elements are defined, mostly accounting and prudential data;

23 dimensions are managed, which is a high number, as each data has to be analysed under different angles, depending on its end user.

A state-of-the-art structure, a “modularized” structure: A single taxonomy including a number of sub-taxonomies;

… to implement controls between the different templates.

SURFI will experiment the new “Formulae” specification: The SURFI taxonomy will be one of the first to make use

of the recently approved specification, which allows to include different types of controls within a taxonomy.


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2. Building a common reporting framework: SURFI project



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Current financial crisis has demonstrated the paramount importance of transparency to restore confidence

In the search for relevant and accurate information, XBRL has played an important role for supervisors and market participants, in 3 areas:

1. In the harmonization of supervisory reporting, and therefore practices, in Europe,

2. In the development of a “better regulation”, committed to reduce, to the extent possible, the reporting burden for the industry,

3. And by contributing to enhanced confidence through increased transparency.


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3.1. The harmonization of supervisory reporting and practices in Europe

A single market has to be regulated and supervised with common instruments: Reporting is a key part of the supervisory process. It is part of the level playing field and a precondition to foster information sharing between supervisors. It also contributes to the development of a common supervisory culture, allowing each group to be supervised in the same way.

Harmonization in the banking sector has still to be improved but is already well on his way.


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3.2. The development of a “better regulation” with the reduction of reporting burden for the industry

Promoting a better regulation: common reporting should not mean more information, but more relevant information and common data definitions: A prerequisite is an in-depth assessment of supervisory

needs. Simplification of reporting requirements should go along

more relevant analysis.

Reducing the reporting burden, in particular by eliminating double collection of data: As an free and open standard, XBRL allows to move from

costly regulators’ proprietary solutions; Its data structure flexibility makes it easier to adapt it to new

regulations.


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3.3. Restoring investors confidence through increased transparency The G20 has stressed the role of lack of transparency in

the recent financial crisis: It is difficult to analyse annual reports’ hundreds of pages to find

the relevant information, understand the risks taken by an institution and make appropriate comparisons;

The complexity and opacity of structures such as CDO’s, CMBS and other structured exposures has not allowed to make appropriate risk assessments, increasing the level of risk aversion.

In the future XBRL will help: Collecting clear and comparable information, based on definitions

elaborated by interested parties (industry, regulators, investors), contained in open and public taxonomies;

Receiving enhanced quality data and treating them in an automated and flexible way, reducing time of analysis and improving reactivity.


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Initiatives taken so far to benefit from this technology: The decision recently taken by the SEC to make it mandatory

for public companies to submit their financial statements in XBRL is a very promising development, as well as similar initiatives in Asia;

In Europe, bank supervisors have led the way in the regulatory field;

Also in Europe, annual accounts legal deposit has now been automated, using XBRL in about 10 countries, providing easy availability of hundred thousands accounts for analysts.

Those are encouraging start. But more has to be done on order to fully take advantage of this standard.


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Conclusion

XBRL is an efficient answer to the increasing need for transparency;

XBRL is an adequate answer to the CEBS’ objectives to foster convergence in supervisory reporting and practices in Europe;

XBRL also contribute to reduce reporting burden for the industry;

XBRL is the Banque de France’s reporting standard.


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Thank you for your attention.

Documents

SURFI Unified FInancial Reporting System Towards an harmonized reporting framework with XBRL