Download XBRL and banking supervision

XBRL AND BANKING SUPERVISION
José María Roldán
Director General of Regulation, Banco de España
Chair, XBRL España
Chair, Committee of European Banking Supervisors (CEBS)
1ère Conférence XBRL France
17 janvier 2006
Playing several roles today
 As Director General of Regulation of the Bank of Spain
 As Chair of the Committee of European Banking
Supervisors (CEBS)
 As Chair of XBRL-Spain
Directorate General of Regulation, Banco de España
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The importance of XBRL
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Efficient markets depend on information
– A market is efficient if prices reflect all information on underlying asset(s)
But information is costly
– To generate, transmit and use
XBRL promotes efficiency of information flows
– For both the generators and users of financial information
– This, in turn, promotes greater efficiency and efffectiveness for the system
as a whole
– Including through pricing that is based on more accurate and timely
information and therefore that better reflects underlying realities
Public policy aspect of XBRL
– Accuracy
– Reliability
– Speed
Directorate General of Regulation, Banco de España
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CEBS
What is CEBS?
 A high-level committee of representatives from the
banking supervisory authorities and central banks of
the European Union
What are its tasks?
 To advise the European Commission on banking policy
issues, in particular for the preparation of draft
measures for the implementation of EU legislation
 To foster consistent day to day implementation and
application of Community legislation by issuing
guidelines, recommendations and standards
 To promote supervisory co-operation and provide for
the exchange of supervisory information
Directorate General of Regulation, Banco de España
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CEBS and
initiatives on reporting
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Current situation: 25 countries asking for different information - different
definitions; different IT systems; incompatible formats
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CEBS has taken two main initiatives to promote common reporting
requirements:
1. Common reporting of the solvency ratio (COREP): final publication 13
January 2006
2. Common reporting for financial data (FINREP): final publication 16
December 2005
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These initiatives take advantage of the fact that Basel II and IFRS will
require all supervisors to change their reporting requirements
And XBRL provides the right technology at the exact moment it is needed
most!
CEBS has decided in both initiatives to promote the use of XBRL with the
development of two taxonomies.
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Directorate General of Regulation, Banco de España
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Why?
Expected benefits:
• Level playing field: common reporting framework across
the EU
• Reducing administrative costs for banking groups (mainly
for cross-border banks)
• Removal of potential obstacles to financial market
integration
• Easier exchanges of information between supervisors
• Increased cost effectiveness of supervisory activities in the
EU
• More flexible framework: across countries and over time
• Improving the quality of information flows from reporting
entities
Directorate General of Regulation, Banco de España
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Advantages of implementing XBRL
in EU (I)
 XBRL will enable banks to fulfil the reporting
requirements of supervisory authorities across the EU
with a single IT standard
 The costs of implementing EU common reporting in
cross-border groups will be reduced
 Less administrative and implementation costs
 Small banks may benefit from a free standard like
XBRL and from the economies of scale derived from
the development of the XBRL taxonomy by CEBS
 Less implementation costs
 Also, supervisors may benefit from economies of scale
 Increased cost effectiveness of supervisory
activities due the use of IT STANDARDS
Directorate General of Regulation, Banco de España
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Advantages of implementing XBRL
in EU (II)
 XBRL standard will facilitate the transmission of the
common definitions expressed in common EU reporting
 Level playing field and removal of obstacles for
financial market integration
 In short, the compatibility of formats, contents and IT
systems supported by XBRL will allow supervisors to
collect information on a decentralized way, while having all
the functionalities as if a centralized data base were in
place and benefiting from additional flexibility
Directorate General of Regulation, Banco de España
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European Law:
Basel II implementation
Basel II
European Law
9X,XX% Basel II compatible
Directives 2000/12 & 93/6
Country 1
Country 2
Country 3
Transposition into
national Legislation
Country 25
National Regulation
Auth. 1
Auth. 2
Auth. 3
Auth. 25
National Implementation
Report 1
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Report 2
Report 3
Report 25
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Directorate General of Regulation, Banco de España
XBRL challenge!
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XBRL Window of opportunity
2002
2003
2004
2005
2006
2007
2008
Too late
Today!
Operational:
Basel II
IFRS/IAS
•••
Too early
Establishing:
CEBS
XBRL EU
•••
Directorate General of Regulation, Banco de España
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XBRL in Spain
 Spain’s involvement
 Spain became an XBRL jurisdiction in 2004
 XBRL España Association is chaired by Banco de España (Central
Bank and Banking Supervisory Authority of Spain). Public interest
aspect of XBRL
 Aim of XBRL España
– To foster the introduction, adoption and development, both at a
national and international level, of the XBRL language, for the
purpose of unifying the standards applicable to financial and
business reporting
 Ultimate goal:
– Facilitate the integration of the Spanish & European Financial
Markets
Directorate General of Regulation, Banco de España
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Activities of XBRL-Spain
 Quick increase in the number of members in XBRL
Spain, up to 40
 Cooperation between different regulatory agencies is
one of the main targets
 A number of XBRL taxonomies has been completed
 XBRL has been implemented and now is in use
 There has been a strong collaboration with other
international taxonomies (i.e., COREP, IFRS-GP)
Directorate General of Regulation, Banco de España
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Projects of Bank of Spain
SIIF: receiving public financial statements in XBRL
– So far, only the main groups are included in this
project
– During 2006, the rest of the banking groups will join
the project
– Banks may re-use the information to report to other
agencies (i.e. Securities Commission)
Directorate General of Regulation, Banco de España
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Projects of Bank of Spain
Spain COREP: receiving capital information based on
new CRD (EU’s Basel II).
– Leading the XBRL project since the beginning.
– Developing a national project during 2006, in order
to start receiving information in 2007
– Cross-border Spanish banks may report the same
information to other supervisory agencies in EU
Directorate General of Regulation, Banco de España
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Projects of Bank of Spain
Spain FINREP: receiving supervisory reporting in
XBRL
– Implementing a harmonised financial reporting
framework in EU
– Participating in the development of the FINREP
taxonomy
– To be developed during 2007
Directorate General of Regulation, Banco de España
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Other XBRL projects in Spain
 General Identification Data:
– Setting a common taxonomy to identify the
reporting entity
 General Accounting Plan:
– To allow the reporting of non-financial companies
according to local GAAP
 Listed companies information:
– Developed by the Spanish securities commission
Directorate General of Regulation, Banco de España
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CONCLUSIONS
 One of the strengths of XBRL is that it only needs a small critical
mass
 From the Spanish perspective, even just the Banco de España
initiatives for banks’ reporting represent a huge step forward
 But if we take all of the different initiatives together, e.g.
– In Spain
– In the EU (CEBS)
– And more further afield (e.g. SEC initiatives)
 We have a hugely potent tool
Template reporting is dead…
…Welcome to the era of tag reporting!
Directorate General of Regulation, Banco de España
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Thank you for your attention
Directorate General of Regulation, Banco de España
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