European Banking Supervision: COREP and FINREP Taxonomies Roadmap 19th XBRL International Conference “Reducing regulatory burden with XBRL: a catalyst for better reporting” June 22-25, 2009 Paris, France European Banking Supervision: COREP and FINREP Taxonomies Roadmap Ignacio Boixo, Banco de España Katrin Schmehl, Deutsche Bundesbank 24th June 2009

European Financial Stability 2

European System of Financial Supervisors Steering Committee European Banking Authority (EBA) European Insurance and Occupational Pensions Authority (EIOPA) European Securities Authority (ESA) National Banking Supervisors National Insurance and Pensions Supervisors National Securities Supervisors ESFS: Micro-prudential information 3

Collect micro-prudential information The European Supervisory Authorities should be responsible for the aggregation of all relevant micro-prudential information emanating from national supervisors. A Central European Database should be established and managed by the European Supervisory Authorities. The information would be available for the relevant authorities in colleges of supervisors 4

European Supervisory Authorities New European Supervisory Authorities working in tandem with the national financial supervisors…. building upon the existing structures Opposed to solutions such as full centralisation of supervision Strengthened framework will be up and running in 2010.The information may be forwarded in aggregated and/or anonymous format to the ESRC. 5

European System of Financial Supervisors Three European Supervisory Authorities European Banking Authority (EBA) European Insurance and Occupational Pensions Authority (EIOPA) European Securities Authority (ESA) Appropriate national supervisory authorities Cross-sectoral cooperation, in addressing cross-sectoral challenges, including financial conglomerates 6

Race is just started! European Commission proposed on May 27 http://ec.europa.eu/internal_market/finances/docs/committees/supervision/communication_may2009/C-2009_715_en.pdf ECOFIN: European Ministries of Economy approved on June 9 http://register.consilium.europa.eu/pdf/en/09/st10/st10862.en09.pdf European Heads of State or Government endorsed on June 18 http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/108622.pdf 7

COREP and FINREP roadmap 2009 2010 2011 2012 2013 COREP FINREP Design phase Consultation phase Decision phase Transposition phase Application phase Note: Possible changes to the Capital Requirements Directive are in discussion! 8

Collaborative Tasks in Detail Business Experts Track Identification of the measures Identification of common elements Taxonomy Development Track Normalisation of the templates Business Experts Track / Taxonomy Development Track Identification of IFRS elements relevant for FINREP Definition of the data types Instant or duration Debit or credit Common labels

Collaborative Tasks in Detail Business Experts Track Definition of validation rules Preparation of meaningful test cases Taxonomy Development Track Creation of schema matrixes Business Experts Track / Taxonomy Development Track Quality insurance by peer-2-peer review and business review Taxonomy Development Track Definition of design principles for the FINREP taxonomy 10

Collaborative Tasks in Detail Taxonomy Development Track Creation of a draft FINREP taxonomy Taxonomy Development Track Reverse engineering into schema matrix by an application and alignment check with agreed schema matrix Taxonomy Development Track Preparation of test cases Taxonomy Development Track Public review period 11

Further Tasks Taxonomy Development Track Taxonomy Development Track Definition of design principles on formulas Taxonomy Development Track Creation of the European formula linkbase Taxonomy Development Track Creation of documentation on taxonomy architecture 12

Identification of the measures and dimensions Business Experts Track Identification of the measures Identification of common elements dimension measures common elements Makes FINREP understandable for IT purposes !

Normalisation of the templates Taxonomy Development Track Normalisation of the templates measures dimension dimension No impact on changes in the presentation !

Identification of IFRS elements FINREP IFRS Business Experts Track / Taxonomy Development Track Identification of IFRS elements relevant for FINREP The amount of fitting elements could be relatively small.

Creation of schema matrixes Taxonomy Development Track Creation of schema matrixes What the supervisors ask for! What is being defined by IT! EXCEL view XBRL view

Creation of schema matrixes Taxonomy Development Track Creation of schema matrixes EXCEL view XBRL view Schema matrix view

Taxonomy Development Track Design principles Taxonomy Development Track Definition of design principles for the FINREP taxonomy One schema for the primaries One schema per dimension . dimension .XSD common primaries .XSD template .XSD imports

Taxonomy Development Track Design principles Taxonomy Development Track Definition of design principles for the FINREP taxonomy Comprehensive Error Messages XBRL dimensional error messages aren’t sufficient. Element name is not comprehensive. Banking supervisors work with national labels or position numbers. When labels essentially change, the element names would be adapted.

Taxonomy Development Track p-sd:ConversionFactorApplied Design principles Taxonomy Development Track Definition of design principles for the FINREP taxonomy Comprehensive Error Messages When the element name is not comprehensive, p-sd:ConversionFactorApplied why not using a codification? p-sd:p122365 Advantages: + Easier to read by technical staff + Size of the instance is considerably smaller + More stability

Design principles Taxonomy Development Track Definition of design principles for the FINREP taxonomy Comprehensive Error Messages Solution: + Usage of formula linkbase + Assignment of an error description + Definition of error description in national languages Instance: Taxonomy: <p-sd:p122365>150.00</p-sd:p122365> ConversionFactorApplied Possible validation result: The value of should be smaller than 100.00 but the reported value is . ConversionFactorApplied 150.00

Taxonomy Development Track Defined by using the Definition Linkbase Design principles Taxonomy Development Track Definition of design principles for the FINREP taxonomy How to modularise the European taxonomy Defined by using the Definition Linkbase XBRL dimensional error messages aren’t comprehensive. Possible validation result: The following check is not valid: “p122365 | s1 | c1” : ConversionFactorApplied Scope of Consolidation CRD Defined by using the Formula Linkbase |

Taxonomy Development Track Design principles Taxonomy Development Track Definition of design principles for the FINREP taxonomy To be discussed: + Usage of open / closed hypercubes + Usage of default values + Usage of typed dimensions + Definition of administrative data (header information) + How to define European formulas + Reduction of constraints

Test cases and examples Taxonomy Development Track Preparation of test cases + Creation of XBRL formulas on basis of Excel formulas defined in the spreadsheets + Creation of sample test cases based on the provided numbers

FINREP superset of reports Modularisation Current situation ! How changes were adapted to the national needs? Expected: FINREP superset of reports Custom report Large report Small report Custom report Realised: Medium Small Medium report

Presentation Linkbase Modularisation Situation in the future! How changes will be adapted to the national needs? European Approach Definition Linkbase Formula Linkbase CEBS taxonomy .XSD Label Linkbase(s) Presentation Linkbase National Approach National Definition Linkbase CEBS taxonomy .XSD Formula Linkbase Label Linkbase(s) Presentation Linkbase No changes on concepts ! Only additional linkbases !

Best Practices + Harmonisation efforts on basis of the XBRL instances

Presentation Linkbase Deliverables What is going to be provided? Definition Linkbase Formula Linkbase CEBS taxonomy .XSD Label Linkbase(s) Presentation Linkbase European Approach Schema matrixes Header taxonomy .XSD Label Linkbase Test cases Taxonomy Architecture Documentation Formula Documentation +

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