Danièle Nouy of ECB Speaks About Reducing Reporting Burden for Banks

She examined the uses of data for banks and supervisors while emphasizing that supervisors need high-quality data and rely on them to create risk profiles of banks and analyze liquidity and capital of banks. She mentioned that ECB makes available aggregate data on banks and highlighted that banks still need to improve their data frameworks and that the BCBS principles for effective risk data aggregation and risk reporting (BCBS 239) provide guidance in this area. Next, she discussed the "indisputable burden that reporting puts on banks." ECB tries to alleviate this burden through various initiatives and three relevant actions in this context are to standardize, integrate, and harmonize reporting. For standardization, one goal should be to have unique identifiers for banks and their counterparts. This would help to further consolidate reporting and lighten the burden on banks. The Legal Entity Identifier (LEI) has been a good first step toward this and banks are already benefiting from applying it.

To integrate and harmonize reporting, European banking supervision will, for instance, set up a database containing all the recurring requests for supervisory data that are addressed to banks under the direct supervision of ECB. This database will allow monitoring of the overall reporting burden on these banks. It will not only allow ECB to provide banks with a preliminary overview of data requests for the year ahead but it will also allow ECB to present its Supervisory Board with an annual dashboard showing all bank-specific and horizontal data requests. This will help in streamlining and harmonizing the data requests and thus simplify reporting for the banks. Additionally, there is also the Banks’ Integrated Reporting Dictionary (BIRD) Initiative. BIRD is a voluntary tool that helps banks to organize their data by providing a common data dictionary and common transformation rules. This makes it much easier for software companies and banks to implement reporting requirements in a uniform manner. This helps banks to report data to the required level of granularity.

To further improve integration in reporting, she suggested that, from an institutional point of view, it might help to formalize and expand the role of EBA, in the field of supervisory data. EBA could, for instance, integrate supervisory reporting and disclosures under Pillar 3 of the Basel Accords. It could then develop and maintain a relevant hub of bank data collected from regulatory reporting. This would help banks as they would only need to report the respective data once. This would help to set the right incentives for improving data quality and this is one of the insights from the transparency exercises of EBA. It would also help supervisors and market participants because they would have easier access to the data. The United States could serve as a role model in this regard. Finally, she reiterated the importance of data, saying that data are at the heart of banking supervision and data underpin the supervisory judgment, decisions, and actions. 

Related Link: Speech

Keywords: Europe, EU, Banking, Reporting, BIRD, LEI, Pillar 3, BCBS 239, ECB