1. Role of Credit Bureaus and Registries Session 1 – Asymmetries of information, regulatory frameworks, improving transparency and financial knowledge Serena Holm, SCHUFA Holding AG Milan, December 13 th 2011

2. Page 2 Agenda 1Role of a Credit Bureau 2 Private Credit Bureau and Public Registry 3Credit Bureau Data (example SCHUFA Holding AG) 4Benefit of a Credit Bureau

3. Page 3 credit  deduced from „credere“ (Latin) = trust „creditum“:to entrust in good faith Provision of money or goods and commercial loans for a period of time by means of loan agreement, instalment loans, mortgages, rental agreement, leasing contract, etc. Role of a Credit Bureau The meaning of „credit“

4. Page 4 Credit in the economic life -Credit institutions to individuals Consumer credit Leasing Credit card Mortgage -Credit institutions to SMEs and legal entities Commercial loan Leasing Credit card Mortgage Role of a Credit Bureau Credit in the economy

5. Page 5 Credit in the economic life -Business (non-banks) to Consumer Purchase on account Advanced services (telecommunication) Leasing Credit card -Business (non-banks) to Business (non-banks) Purchase on account Purchase on credit Leasing Credit card Role of a Credit Bureau Credit in the economy II

6. Page 6 Protection of the members against losses in the credit business Protection of the borrowers against over-indebtedness What a luck ! ! Credit Bureau Role of a Credit Bureau Objectives

7. Page 7 7  Minimize information asymmetry between debtors and creditors, create balanced access to capital and information.  Allow creditors more effectively and with low costs evaluating risks and improving portfolio quality.  Make it more easy for good payers to access capital sources and create a wall between financial sources and cheating.  Multiply the volume of non-secured credits and loans for companies and individuals.  Support an introduction of advanced risk assessment technologies and show relevant data needed for payment behaviour prediction. Role of a Credit Bureau Role on financial market

8. Page 8 Without credit history:  No credit for essential things for living  No car for traveling to work and transportation of goods  No asset building and wealth creation  No adequate possibilities for companies to expand Lack of a credit history leads to social exclusion Role of a Credit Bureau Lack of information – no access to credit

9. Page 9 Agenda 1Role of a Credit Bureau 2 Private Credit Bureau and Public Registry 4Benefit of a Credit Bureau 3Credit Bureau Data (example SCHUFA Holding AG)

10. Page 10 Private Credit Bureau and Public Registry The most important qualities of credit bureaus (and registries) 2 3 4 5 6 1  Contain both positive and negative information  Contain data on both individuals and companies  Contain data from financial institutions and others (telco, retailers, utilities)  Contain five or more years of historical data preserved  Contain data on all loans  Guarantee consumer’s right to inspect own data and amend it

11. Page 11 Agenda 1Role of a Credit Bureau 2 Private Credit Bureau and Public Registry 3Credit Bureau Data (example SCHUFA Holding AG) 4Benefit of a Credit Bureau

12. Page 12  479 million data items on 66,2 million private individuals  data of over 3,8 million companies  6.000 contract partners  100 million credit reports to contract partners (p. a.) / 270.000 per day  more than 1 million credit reports to consumers (p. a.)  1.2 million private clients on the consumer web gateway www.meineschufa.de Credit Bureau Data (example SCHUFA Holding AG) Facts and Figures of SCHUFA Holding AG Schufa contains data on both individuals and companies:

13. Page 13 Positive Data  Bank accounts  Credit cards  Mortgage credits  (Mobile) Telephone service accounts  Utilities service accounts  Insurance contracts Credit Bureau Data (example SCHUFA Holding AG) What data is typically stored? (Please note: non-exhaustive enumeration) Negative Data  Due balance  Misuse of account  Account in liquidation  Balance after court judgement  Oath of disclosure  Arrest order to force oath of disclosure

14. Reporting of negative information Reporting of positive and negative information Housing Associations Telecommunication Mail Order eCommerce Savings banks Special Credit Institutes Major and Private banks Cooperative banks Regional banks Building societies/ mortgage banks Collection Agencies Trade companies Leasing companies Electric Utilities Service companies Credit card companies Insurance companies Credit Bureau Data (example SCHUFA Holding AG) What data is typically stored? (Please note: non-exhaustive enumeration) Page 14

15. Credit report (before signing of contract) Credit report includes:  Personal particulars  Details of non-compliance with contractual obligations  Information from public directories  For credit institutes, leasing and credit card companies: additional positive information (such as repayment of loans according to contract or before maturity) Enquiry Credit Report Client Credit Bureau Data (example SCHUFA Holding AG) Key Products of SCHUFA Holding AG Page 15

16. Monitoring report (Updating information during term of agreement) Public Directories Client 1Client 2 Information about customers Notification Monitoring Reports Credit Bureau Data (example SCHUFA Holding AG) Key Products of SCHUFA Holding AG Page 16

17. Page 17 Agenda 1Role of a Credit Bureau 2 Private Credit Bureau and Public Registry 3Credit Bureau Data (example SCHUFA Holding AG) 4Benefit of a Credit Bureau

18. Page 18 Use of non-traditional (non-banks) data: Early Warning System Late payments in non-traditional sectors are indicators for future financial difficulties Credit Bureau Data (example SCHUFA Holding AG) Bridge the information gap

19. Page 19 Using negative and positive data: Decrease of defaults Effect on Default Rates of Including Positive Information (simulation using U.S. data)* * IFC: Credit Bureau Knowledge Guide 2006 Credit Bureau Data (example SCHUFA Holding AG) Differences of negative / positive data

20. Page 20 Using negative and positive data: Increase of Approvals Effect on Approvals of Including Positive Information (simulation using U.S. data)* * IFC: Credit Bureau Knowledge Guide 2006 Credit Bureau Data (example SCHUFA Holding AG) Differences of negative / positive data

21. Thank you very much for your attention ! Serena Holm Head of Corporate Affairs Tel.: +49 (0) 611 - 9278-130 Fax: +49 (0) 611 - 9278-8130 Mobil: + 49 (0) 173 - 34 89 473 E-Mail: serena.holm@schufa.deserena.holm@schufa.de SCHUFA Holding AG Kormoranweg 5 65201 Wiesbaden Germany www.schufa.de