AnaCredit - Is it One regulation or Many? A look at the impact of National variations.

It depends on who is answering that question. Really!!

It is a single uniform regulation at the ECB (European Central Bank) level with clearly spelt our coverage. To ECB’s credit they have given comprehensive implementation information through the detailed AnaCredit Reporting manual, part 1, 2 and 3. The information that they expect from all the participating NCBs (National Central Banks) is uniform and that is what is detailed in the manual. They however add that there is room for some national discretion (National Arrangements as ECB refers) with the National Central Banks (NCBs) on how they collect that information from their constituents. National Central Banks, that need to adhere to the AnaCredit regulation, have or will have a single uniform regulation for their constituents.

Interestingly however, if you ask the banks and credit institutions that need to provide the required information in the required format and frequency, there would be two different answers.

• The Domestic banks and credit institutions (those incorporated and operating in a single country and regulated/ supervised by one NCB) will say it is one regulation since they need to comply with only one set of guidelines as mandated by their NCBs.
• Regional and global banks will have a different answer. For them it is multiple variants of AnaCredit implementation as they will need to follow the mandates of the different NCBs that they report into.

The critical point to be kept in context while discussing AnaCredit is that it is a twostep process as I spoke of in my previous blog. Step one is where Banks and Credit Institutions submit the Credit data sets across the 10 subject areas to their National Central Banks. Step 2 is NCBs submitting the data to ECB as required by the AnaCredit regulation (ECB refers to this as the “Baseline Scenario”). Note that I have not said the data NCBs receive from their constituents. And therein lies the plurality that regional and global banks will need to address.

Scope of National Arrangement areas per part 1 of the AnaCredit Manual issued by ECB (AnaCredit Reporting Manual Part 1 dated 9th November 2016) are

• NCBs may collect the information to be transmitted to the AnaCredit database as part of a broader national reporting framework.
• NCBs may extend the reporting of granular credit and credit risk data beyond the scope outlined in the AnaCredit Regulation, for their own statutory purposes, in line with relevant national law What some of my Banking friends refer as AnaCredit ++
• NCBs decide on the reporting format and timeliness in which they receive the data from reporting agents.
• May exempt reporting agents from reporting counterparty reference data information to the relevant NCB, when such information can be obtained using reliable alternative sources.
• May grant derogations to small reporting agents, if the total outstanding amount of loans granted to derogated entities does not exceed 2% of the total national outstanding amount of loans;

Whether NCBs decide to deviate from the “baseline requirements”, and to what extent, will be communicated by them. The moot question is what does all of this mean to Banks and Credit Institutions that have global or even regional operations? Short answer, it impacts all three aspects - content, timelines and the format of reporting and that is saying a lot. Some of the countries that have come out with their implementation guidelines like Germany, Netherlands, Belgium, France and Ireland point to the reality of national variations of the execution of AnaCredit regulation in different geographies.

• Content
  • Can become part of a larger data set as in case of Belgium (AnaCredit ++?)
  • Reduced set of attributes may be asked if the National Central bank (Counter party reference data) can source some of the data from other sources e.g. DNB, Netherlands
  • Exempt or Not exempt resident foreign branch from reporting – e.g. Germany

• Submission
  • Different timelines
    • Actual submission dates - Could be earlier than the ECB timelines
    • Frequency of submission – eg Daily for changes, monthly, quarterly…
  • Different submission formats – xbrl, xml, csv etc.

All the above truly make the implementation of AnaCredit much more nuanced, requiring a well thought out inclusive functional and information policy and architecture. In my next blog, I will explore the “Regulatory hub” approach that the banks with multi country presence might want to consider so they can have a “Unity in Diversity” construct that can be leveraged not just for AnaCredit implementation but that which enables them to truly “use” and “reuse” their biggest asset – DATA to create business value.