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ESBG Summary of Comments on CEBS Consultation Paper on FINREP Amendments

Core Content

The European Banking Group (ESBG) has provided comments on the CEBS consultation paper regarding amendments to the Guidelines on Financial Reporting (FINREP) dated 10 March 2009. ESBG acknowledges the opportunity to contribute further to the discussion and supports the initiative aimed at reducing the supervisory and reporting burden for credit institutions within the European Union.

Main Points

ESBG's comments focus on several key areas that require careful consideration in the proposed amendments to FINREP:

• Reduction of Reporting Burden: ESBG supports the move to simplify reporting by reducing the amount of quantitative data required. However, they caution that this does not necessarily lead to a reduction in the overall reporting burden, as the amendments may introduce new information requirements that are equally or more complex to produce.

• Reporting Frequency: ESBG is concerned about the potential for increased time pressure due to the proposed quarterly or semi-annual reporting frequencies. They recommend that annual reporting frequencies be preferred, as they would allow for more comprehensive data preparation and reduce the operational strain on institutions.

• Complexity and Data Availability: The ESBG notes that the FINREP reporting process is already complex and that some of the proposed requirements may necessitate significant changes in accounting practices and IT systems. Specifically, they mention the challenges related to "economic hedges derivatives," which may not be easily available on an accounting basis.

• Harmonization with IFRS: ESBG emphasizes the importance of aligning FINREP definitions with those of International Financial Reporting Standards (IFRS), particularly IAS 39. This would ensure consistency and clarity in financial reporting, making it easier for institutions to comply with both regulatory and accounting standards.

• Sectoral Breakdown Harmonization: ESBG calls for a harmonization of the sectoral breakdown of information across Statistical, FINREP, and COREP reporting frameworks. This would help in creating a more coherent and comparable set of data across different regulatory requirements.

Key Information

• Support for Simplification: ESBG supports the simplification of financial reporting for credit institutions in the EU.
• Concerns about Burden: They highlight that the reduction of data does not automatically reduce the reporting burden.
• Preference for Annual Reporting: ESBG recommends annual reporting frequencies over quarterly or semi-annual to alleviate time pressure.
• Need for Accounting and IT Adjustments: The complexity of certain reporting elements, such as economic hedges derivatives, may require substantial changes in accounting and IT systems.
• Call for Harmonization: ESBG advocates for harmonization between FINREP and IFRS, especially IAS 39, and between the sectoral breakdowns of Statistical, FINREP, and COREP.

These comments reflect ESBG's commitment to ensuring that financial reporting requirements are both effective and feasible for credit institutions across the European Union.