EBA Sets Out Recommendations to Reduce Supervisory Reporting Costs
EBA published a report that sets out 25 recommendations for reducing the compliance costs associated with supervisory reporting requirements, primarily for small and non-complex institutions. EBA identified the recommendations collectively, leading to a potential reduction of up to 15%-24% in the reporting costs of banks. The recommendations will improve reporting requirements and processes for all institutions while retaining the end-user benefits of the single supervisory framework. The recommendations address four broad areas: changes to the development process for the EBA reporting framework, changes to the design of EBA supervisory reporting requirements and reporting content, coordination and integration of data requests and reporting requirements, and changes to the reporting process, including the wider use of technology.
Under the Capital Requirements Regulation, EBA is mandated to measure the costs institutions incur when complying with the reporting requirements set out in the implementing technical standards on supervisory reporting. EBA is also asked to assess whether these reporting costs are proportionate with regard to the benefits delivered for the purposes of prudential supervision and make recommendations on how to reduce the reporting cost at least for small and non-complex institutions. Following are some of the key recommendations in the EBA report:
- Better signposting of the requirements, including the reporting requirements, applicable to different groups of institutions
- Seeking greater stability into EBA supervisory reporting requirements and providing longer implementation period for the changes into the reporting requirements
- Introducing better articulation and explanation and providing examples and better instruction (including, where possible in machine readable format) to help institutions with the implementation of the reporting requirements
- Streamlining liquidity reporting (additional liquidity monitoring metrics) and excepting small and non-complex institutions from reporting certain templates
- Introducing changes to reporting large exposures, leverage ratio, and net stable funding ratio
- Investigating ways to enable simplified consolidated reporting for the groups that consist of entities benefitting from the simplified reporting requirements
- Improving and further simplifying the reporting on asset encumbrance, including considering exempting small and non-complex institutions from certain reporting
- Reviewing asset encumbrance definition to create the level playing field between entities applying different accounting standards
- Reviewing the scope of application and frequencies of the reporting templates identified as least important and less frequently used by supervisors
- Adopting a "core + supplement" approach when designing new reporting requirements and revising existing requirements, where feasible
The report also identified the need to remove barrier to the wider adoption of fintech and regtech solutions by institutions as well as the need to promote better digitalization of the institutions’ internal documents and contracts. The report identifies potential benefits of better data integration, including the integration between supervisory reporting and public disclosures, integration and better internal risk data aggregation within the institutions, and promoting the EBA work on integrated reporting. EBA will incorporate the recommendations into its work program and implement them as part of the ongoing work, according to the availability of internal resources. Certain recommendations would lead to specific policy products that will follow the usual policy development process, which includes seeking industry and other stakeholders’ views through the public consultation process. EBA also plans to continue its work on making the reporting process more efficient for all stakeholders, through its work on the feasibility study of integrated reporting.
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Keywords: Europe, EU, Banking, Reporting, CRR, Basel, Proportionality, Fintech, Regtech, Compliance Risk, Liquidity Risk, Credit Risk, EBA
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