Regulatory Reporting in Europe

Unifying European regulatory reporting

The combination of CRD IV, CRR, and the implementation of Basel III create a new "single rule book". This harmonizes the European banking oversight law, provides for a uniform legal framework in the European market, and significantly hinders regulatory arbitrage.

Based on the CRR and CRD IV implementation, the German federal government submitted a bill to change existing German credit law (the CRD IV Implementation Act) in June of 2012. This bill will also modernize German reporting: reporting requirements will be governed by the new financial information regulation (German "Finanzinformationen-Verordnung", FinaV), which will replace the monthly information regulation (German "Monatsausweisverordnung", MonAwV). Specifically, the FinaV sets the new basis for financial reporting under HGB: institutions must report in-year financial data on an individual level, and expected data on a consolidated level. Both earnings data and plan data will need to be reported. IFRS users must continue to observe financial reporting requirements according to the "Consolidated Financial Reporting Framework" (FINREP). Additionally, COREP introduces standardized European "Common Solvency Ratio Reporting": a binding solvency reporting system for all institutions. New IT reporting standards are introduced with the technical implementations of FINREP and COREP. Their goal is to increase the data quality and comparability of reports using a pre-defined data model with XBRL (eXtensible Business Reporting Language).

The CRD IV and CRR are accompanied by more than one hundred technical regulatory standards, operating standards and guidelines. The European Commission has a mandate to enact mandatory regulation or operating standards, which are to be developed by the European Banking Authority (EBA). The aim is to ensure uniform application of CRD IV and CRR in all member states.

A new version of German "MaRisk" went into effect on January 1st, 2013, mainly to implement standards set by the EBA. Included in the amendment are a number of organizational requirements that have not yet been standardized; their effects depend on the complexity and business model of the institution. 

In addition to the new content requirements, G20 leaders committed in November of 2012 to implement the Basel Committee on Banking Supervision's recommendations for national regulatory treatment of systemically important financial institutions. In March of 2013, the EU decided to have the authority under the Single Supervisory Mechanism (SSM) transferred to the oversight of the European Central Bank (ECB). Initially, major banks in the Euro zone are affected, which accounts for total assets of over 30 billion Euros, or 20 percent of the economic output of one country.

Michael Brinkmann Nagler & Company
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Michael Brinkmann

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