Rethink Financial Reporting: CRD IV | KPMG | UK

Rethink Financial Reporting: CRD IV

Rethink Financial Reporting: CRD IV

While CRD IV is well underway, it’s not too late to alleviate the burdens of regulatory reporting through automation.

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What is the Capital Requirements Directive IV (CRD IV)?

CRD IV, or the Capital Requirements Directive is an EU-wide legislative package that includes prudential rules for banks, building societies and investment firms. The aim of CRD IV is to implement the main Basel III reforms and to prevent future financial crises by ensuring financial transparency across the EEA (European Economic Area).

CRD IV introduces standardised EU regulatory reporting of firm’s minimum capital requirements referred to as COREP and FINREP. These reporting requirements specify the information firms must report to National Supervisory Authorities (NSAs) in areas such as own funds, large exposures and financial information.

What is reported under CRD IV?

CRD IV requires designated
institutions to report large volumes of granular data about their capital
adequacy, large exposures, leverage ratios and liquidity under the following
reporting requirements. These must all be reported in XBRL:

Report

 

Requirement

 

Filing Frequency

 

COREP Own Funds

 

Common Reporting implements standardised data reporting for capital and risk metrics. These templates cover, at a high level:

1. Capital Adequacy

2. Credit and Counterparty Credit Risk

3. Group Solvency

4. Market Risk

5. Operational Risk

6. Leverage

Quarterly

 

FINREP

 

Financial Reporting standardises data reporting requirements for financial information based on International Financial Reporting Standards (IFRS) and/or local GAAP. CRD IV designated credit institutions report balance sheet and income statement data in over 50 reporting templates.

 

Quarterly

 

Liquidity

 

Liquidity risk reporting is applicable to EU/EEA banks. CRD IV introduces three European-specific liquidity metrics:

  1. LCR Delegated Acts
  2. Stable Funding (NSFR)
  3. Additional Liquidity Monitoring (ALMM)

Monthly/Quarterly

 

Large Exposures

 

Large Exposures reporting requires firms to report every large exposure held, that is, exposures to a counterparty or counterparties with values equal or exceeding 10% of the eligible capital base of the firm.

CRD IV firms are additionally required to report certain large exposures which, while not meeting the definition above, have an exposure value equal to or exceeding EUR 300m.

Quarterly

 

Asset Encumbrance

 

Asset Encumbrance reporting is applicable for all firms in score for COREP Own Funds. CRD IV filing firms are expected to report four templates (with limited exceptions):

Template A: Encumbered and unencumbered assets in carrying and fair value amounts by broad categories of asset type;

Template B: Collateral received by an institution, by broad categories of product type;

Template C: Carrying amount of encumbered assets/collateral received and associated liabilities; and

Template D: Business commentary on the impact of the business model on encumbrance levels and relevance of encumbrance on the funding model

Quarterly

 

Other

 

There are other reports required by a small number of firms. These reports are:

1. Supervisory Benchmarking Portfolios

2. SBP - Initial Market Valuation

3. Funding Plans

Annually

 

Who reports under CRD IV?

Standardised EU regulatory reporting under CRD IV applies to credit institutions. However, since CRD IV implements Basel III at a national level, designated reporting banking and investments firms may differ from jurisdiction to jurisdiction. 

What do you need for CRD IV Reporting?

In response to the introduction of CRD IV regulation, KPMG have developed K-Helix. K-Helix is an easy to use software solution that simplifies the full CRD IV
reporting process. It is both intuitive and integrates into your current reporting system, using XBRL as a file format to provide a common, electronic format for business reporting. So, with the right software, keeping CRD IV compliant is made simple.

 

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