One of the recurring concerns of the SSM that is confirmed once more in this year’s supervisory priorities is the issue of data quality. The ECB has imposed considerable additional reporting requests on banks, and have confirmed that they require assurance on the accuracy of these reports. One of the more innovative reactions to these concerns is the Analytical Credit Dataset (AnaCredit) project.
In 2014 the ECB introduced a timetable for the improvement of both micro and macro prudential supervision in the Eurosystem based on credit data retrieved from banks. On 18 November 2015, after more than one year of discussion with the banking industry, the ECB Executive Board finally agreed in principle to the implementation of AnaCredit, and on 4 December 2015, the ECB published a first draft of the regulation concerning AnaCredit.
The current draft of the regulation contains information on the first planned phase of AnaCredit, highlighting that credit institutions have to submit information on a greater level of granularity on their counterparties and exposures to ECB starting mid-year 2017. The threshold for reporting is fixed at €25,000 exposure on a single counterparty level. For those credits classified as ‘non-performing’, the existing reporting threshold of €100 is still valid.
At the end of March 2018 institutions will have to submit a first complete report to the national central banks which then have to report to the ECB. In order to be prepared, national central banks are allowed to request parts of the counterparty and exposure information or even the complete set of credit information from the credit institutions on 30 June 2017. The sum over all required credit data per single transaction is 94 datapoints.
These flexibly evaluable datasets are meant to close gaps in the statistical dataset regarding credit exposures within the European Central Bank System (ECBS) and should support the ECB’s main goal: to ensure financial stability and conduct monetary policy. With AnaCredit the ECB supports the generation of a harmonized framework within the regulatory reporting system. Hence, it offers a basis for the harmonized reporting requirements and fulfils additional regulatory reporting issues. Ultimately, the data collected could feed the ECB’s business model analysis and give a clearer view of which loans are non-performing.
An overall consultation and resolution by the ECB Executive Board is expected within the first quarter of 2016. An extension of the reporting system to both additional financial market participants and additional data is highly probable. AnaCredit will be one of the biggest challenges in banking control and management over the next few years. As banks are already challenged to generate comprehensive transparency with respect to the credit portfolios, and face major expenses on both process and IT implementation.