Blog By: Saloni Ramakrishna, author and senior director, Oracle Financial Services Analytical Applications.
I am quite fascinated with the European Central Bank’s (ECB’s) AnaCredit Regulation that came into effect on 18th May 2016 – A regulation that requires granular credit data sets from the national central banks (NCBs) of the member countries based on the data they collect from their constituents- Banks and Credit Institutions. The project was initiated in 2011 and made a regulation in May 2016. Data collection from the NCBs is scheduled to start in September 2018. The objective of ECB in asking for the granular credit data is to integrate and harmonize the national credit registers that will enable ECB to understand the credit Risks being taken by banks both at the Individual borrowers and corporate level.
As the details of the regulations are getting released, it is becoming clear that AnaCredit is a nuanced regulation and requires a closer look as well as a well thought out plan for execution. A simple comparison with the other major regulatory reporting requirement the FinRep / CoRep brings out three critical differences in the construct and design of the regulations (Not speaking of the content here).
ECB, post the promulgation of the regulation has released or is in the process of releasing a three part manual* from an implementation stand point.
As the NCBs are detailing the Anacredit implementation approach for their constituents, it is becoming clear that implementation will not be uniform across - there would be geographical variations and local flavors. The manual of ECB, while is the umbrella guidance and baseline requirement, it is imperative for banks and credit institutions to read them in consonance with the national directive of their NCBs. For example DNB (DeNederlandschebank), the Dutch NCB, clearly spells this out when it says “The Manual does not take into account the specific implementation choices made by the individual Member States. So the Manual should be read taking into account the Dutch implementation and the choices made by DNB.”
Therein is one of the most important nuances in the implementation of the AnaCredit regulation – that of national variations. Relevant information on whether or not the NCBs decide to deviate or not deviate as well as national extensions and the timeliness or format of the reporting will be provided by the relevant NCBs. The implementation at the reporting agent’s (Banks & credit Institutions) level will need to be in accordance with their NCB’s directives/ guidance.
In the next blog, I will discuss the areas of national discretions in some detail and the challenges it poses to regional and global banks.