Data at the service of regulatory reporting: Anacredit

In response to increasing need for a harmonized view on credits and a better assessment of indebtedness, the European Central Bank launched Anacredit (Analytical Credit datasets) in 2016. Is this the start of a new era of regulatory reporting?

The Anacredit regulation requires credit institutions to provide a vast amount of highly detailed information on loans exceeding € 25,000 distributed to companies and certain legal entities. Reporting includes collateral values, probabilities of default, types of protection, Legal Entity Identifier (LEI) codes, addresses, number of employees and numerous accounting parameters. This is the first time such a deep level of information granularity has been required in a regulatory report.

The first monthly report (due in October 2018) was based on data as of September 30 that year. It comprised, according to the products of each credit institution, more than one hundred granular data (Attributes) distributed over ten interdependent datasets, each of them organized around an individual instrument or a single counterparty.

Naturally, not all of these data are included in a credit institution’s system, and this raises the question of consistency because they are common with other regulatory declarations (FINREP, COREP, etc.) that provide aggregated indicators.

Challenges of data quality & consistency

Most credit institutions in Belgium and Luxembourg met the first Anacredit reporting deadline. However, the majority have highlighted problems of quality and consistency of data, the cost of the implementation, including re-visiting their IT processes and not least multi-jurisdictional constraints (the possibility of each National Central Bank to vary requirements).

Despite these challenges, credit institutions should see this new regulation as an opportunity

Because most of the data required for Anacredit are also reported in other regulatory declarations (as mentioned above) this is an opportunity for credit institutions to fundamentally review their data management and governance and conduct an in-depth overhaul of their IT architecture and infrastructure. Streamlining and optimization could include setting up a homogeneous common database, as well as standardized rules and definitions to allow consistency checks between the different regulatory reports.

Anacredit: an opportunity to become future-proof

This transformation should be seen from a long-term perspective. It will ensure that institutions are prepared and able to meet all future regulatory needs, particularly evolutions of International Financial Reporting Standards and the extension of Anacredit to natural persons, anticipated for 2020.

Anacredit could be the start of a new era of detailed regulatory reporting. On the one hand, regulators will be able to focus on consistency between different reports submitted by the same reporting agent and, on the other, declarations received by the different credit institutions from the same counterparty will be harmonized. To become truly future-proof, a holistic reflection on the architecture of regulatory data in credit institutions needs to take place sooner rather than later.

Feel free to contact me for a chat about how we could support your organization to become a future-proof credit institution.

Authors: Nesrine Besbes Fatih Aslan