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Summary of the Consultation on Amendments of the FINREP Guidelines

Core Content

The French Banking Federation (FBF) has provided detailed comments on the proposed amendments to the FINREP Guidelines. The main focus of the FBF is on reducing reporting burdens for banks, particularly those operating across borders, while promoting EU-wide harmonization in financial reporting. The FBF emphasizes the importance of consistent application of the guidelines by all supervisors to ensure uniformity and avoid competitive distortions.

Main Views

• Reduction of Reporting Burden: The FBF supports the principle of harmonization and believes that the revised guidelines could reduce future reporting burdens. However, they caution that the actual reduction depends on the internal structure of each entity and that cross-border groups should be allowed to report under the Home selected tables for all subsidiaries, as is the case in France since 2008.
• Uniformity in Financial Reporting: The FBF advocates for the mandatory application of FINREP at the consolidated level to ensure uniformity across the EU. They also propose that FINREP should be the sole consolidated financial reporting framework and that local regulators should commit to applying it uniformly.
• Voluntary vs. Mandatory Application: The FBF is concerned that the voluntary nature of the guidelines may lead to inconsistencies and competitive imbalances. They argue for a strict, mandatory application to maintain fairness and effective supervision.

Key Information

a. Impact on Reporting Burden

• The FBF supports the principle of harmonization.
• They believe that the potential reduction in burden is contingent on the implementation of a unified reporting structure.
• They recommend that cross-border groups should be allowed to report under the Home selected tables for all subsidiaries.

b. Uniformity of Financial Reporting

• Harmonization would improve uniformity if local regulators do not introduce additional tables.
• They propose that FINREP should be the only consolidated financial reporting framework.
• The voluntary nature of the guidelines is seen as a potential source of distortion in competition.

c. Mandatory Application and Solo Level Reporting

• They support making FINREP mandatory at the consolidated level.
• They oppose extending FINREP to the solo level, as IFRS is not used in France at that level, and it would add to the reporting burden.

d. Link with IFRS-GP Taxonomy

• The FBF is interested in aligning FINREP with IFRS-GP but lacks sufficient information on the procedures and update frequencies.
• They note that there are differences between IFRS and banking financial statements, which need to be considered.

e. Reporting Frequencies and Deadlines

• They argue that the current deadlines (20 working days for solo and 40 for consolidated) are impractical.
• They propose aligning the reporting deadlines for both levels, suggesting 40 working days for both.
• They suggest that FINREP should be reported semi-annually, not annually, to align with financial statement publication.

f. Versioning Policy

• They support annual review of FINREP in line with IFRS changes.
• They request more information on how new IFRS standards will be integrated into the FINREP framework.
• They suggest removing IFRS references that are not relevant or clear, such as IAS 1.55 and 1.85.

Detailed Comments on Tables

• Table 3: "Economic hedges" is not part of IFRS and should be removed.
• Table 5A: "Allowances for incurred but not reported losses" is redundant and should be merged with the previous column.
• Table 5C: Breakdown of equity instruments is not relevant due to the absence of credit or counterparty risk.
• Table 5D: A definition of "domestic" is needed for consolidated reporting.
• Table 6: Clarification is needed on the definitions of retail-related asset classes.
• Table 7: Columns for specific and individually assessed financial assets should be merged.
• Table 8: Clarification is needed on the definitions of "assets" and "liabilities" related to notional amounts.
• Table 10C: Similar to Table 5D, a definition of "domestic" is required.
• Table 14: More guidance is needed to clarify the breakdown of fees and commissions.
• Table 15A: The table is not useful for internal management and should be reviewed.
• Table 16B: The breakdown by counterparty is difficult to implement.
• Table 20: The breakdown of doubtful loan commitments and financial guarantees is too complex.
• Table 23: Quarterly reporting of consolidated entities is burdensome and may not provide added value.
• Table 24: "Gross carrying amount" is not accounting data and should be removed.
• Table 25A & B: Columns on unrealized gains and losses are not aligned with IFRS and should be deleted.
• Table 25D: The template is difficult to implement and should be deleted.
• Table 26: The table is not useful due to the lack of line-by-line data and the difference in consolidation scope between IFRS and CRD.

IT Level Harmonization

• The FBF does not support the initiative of recommending IT best practices on cell definitions as a complement to XBRL, arguing that it would add to the cost without clear benefits.
• They do not express interest in collaborating on the work plan.

Conclusion

The FBF is in favor of EU-wide harmonization of FINREP but stresses the need for clarity, consistency, and mandatory application to avoid distortions and ensure the quality of financial data. They also emphasize the importance of aligning reporting frequencies with financial statement publication and removing elements that are not relevant or clearly defined under IFRS.