The European Banking Authority’s new reporting framework: DPM 2.9 | Risk | Deloitte Netherlands

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The European Banking Authority’s new reporting framework: DPM 2.9

Towards further integration of finance and risk data

EBA’s frequent renewal of reporting frameworks and the accompanying DPM puts pressure on banks processes, data flows and the prudential reporting eventually. This article helps in understanding what DPM 2.9 is aiming for and identifies larger trends such as the continuous integration of risk and finance data.

Establishing uniform reporting requirements

Prudential reporting as most banks know it, is a fairly new phenomenon. However, the pace of change is increasing ever since COREP and FINREP have been first introduced. The driving force behind this change is the European Banking Authority (EBA) within its mandate of enforcing a single rulebook for banking supervision in the EU. In this role, the EBA publishes guidelines and Implementing Technical Standards (ITS) to establish uniform reporting requirements across national competent authorities in the EU. COREP and FINREP have been first introduced

EBA’s Data Point Model (DPM)

One of the mechanism for the EBA to update reporting requirements and set standards is through the introduction of new reporting frameworks. A reporting framework is a package consisting of template based reports, annexes explaining how to fill those templates and a data point model (DPM). The DPM is a semantic layer which gives meaning to every cell on a report and uniformly characterizes a cell with the use of dimensions. Where most people simply look at a form-based report or spreadsheet, the DPM makes cells machine-readable for comparison across templates, so-called validation rules.

A new reporting framework every year

An update to the reporting framework is published mostly on an annual basis. Typically the consultation process is structured as follows: a draft package is published first, followed by a public hearing, the release of timelines and so-called consultation papers. Eventually Implementing Technical Standards (ITS) and Guidelines are made available to the public.

Major impact and challenges of implementing DPM 2.9

  • Supervisory benchmarking of internal models apply from 31/12/2019 Smaller changes in the credit risk reporting templates as specified in the ITS. Initial enforcement postponed from 26/09/2019.
  • Resolution reporting templates apply from 31/12/2019
    Requirements with smaller adjustments have been published.
  • COREP changes apply from 31/03/2020
    The focus lies on the new securitization framework which promotes the uniform treatment of credit risk tranches. In the long-term, this should simplify reporting and data-sourcing. Quarterly and bi-annual templates change to make smaller adjustments in line with new regulation. Different capital requirement approaches such as SEC-AIRB and -SA are merged into single hierarchies (templates).
  • LCR changes apply from 30/04/2020
    The goal is to align with the LCR amending Act. This requires new data to include for example assets from third countries and more granular information on their liquidity. New template C77.00 includes information about the parent company and its subsidiaries.
  • FINREP: changes apply from 30/06/2020
    More granular data is needed to include information on non-performing and forborne exposures. New Profit and Loss breakdowns are introduced providing a greater level of detail and requiring more granular General Ledger accounts. This could require an extension of the charter of accounts or a change in the financial closing process. The introduction of IFRS16 will impact FINREP – which is based upon IFRS reporting – as well.

How can Deloitte help your organization?

  • Support with conducting deep-dives and workshop to assess the detailed changes and impact of DPM 2.9
  • Support with the assessment of the requirements and their impact on people, technology, processes and the IT landscape
  • Support with the evaluation of new and existing requirements with a focus on coherent and valid reporting
  • Support with the setup of fully automated and managed reporting chains
  • Support with the implementation of reporting solutions and vendor selection
  • Support with data design and a future proof IT architecture enabling granular reporting

Questions? Get in touch with us today!

The Center of Excellence for Regulatory Reporting (CoE) is a virtual team centralising Deloitte’s Regulatory Reporting knowledge and helping clients to do responsible business by helping them with their regulatory reporting. In order to effectively support our banking clients in this complex regulatory environment, the CoE is founded to (i) stay on top of new developments in the field of regulatory reporting to support timely and appropriate data-driven-reporting solutions at financial institutions, (ii) support financial institutions by leveraging expert view of our international network on ad hoc queries regarding their regulatory reporting data and processes; and (iii) have teaming of professionals to combine expert knowledge in the field of regulatory reporting with strong data and implementation skills to ensure fit-for-purpose teams.

For more information, please contact us via COERegulatoryReporting@deloitte.nl

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