SURFI

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Secrétariat Général de la Commission bancaire

• SURFI
• Unified FInancial Reporting System
• Towards an harmonized reporting
• framework with XBRL
• 19th XBRL International Conference

Paris, 24 June 2009 Danièle NOUY, Secretary
General of the Commission bancaire
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Outline

• 1. Harmonizing banks supervisory reporting in
  Europe
• 2. Building a common reporting framework Banque
  de Frances SURFI project
• 3. XBRL a powerful tool to deliver more
  transparency

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• 1. Harmonizing banks supervisory reporting in
  Europe
• Building a common reporting framework Banque de
  Frances SURFI project
• 3. XBRL a powerful tool to deliver more
  transparency

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1. Harmonizing banks reporting in Europe

• In 2005, CEBS decided to adopt a common reporting
  framework for COREP and FINREP
• COREP COmmon REPorting for a common solvency
  ratio. Following the adoption of Basel II,
  implemented in Europe by the CRD Directives, CEBS
  elaborated a common reporting framework, and
  published it in January 2006.
• FINREP FINancial REPorting for common
  supervisory financial reporting for banks
  consolidated accounts in IFRS CEBS published the
  templates in December 2005.
• In France, the first such reports were received
  by the Commission bancaire in June 2007.

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1. Harmonizing banks reporting in Europe

• The benefits of a common reporting framework were
  the following
• It contributes to the harmonization of
  supervisory practices in Europe and, as such,
  helps developing a common supervisory culture
• It reduces the regulatory burden and the costs of
  reporting for cross-border banks
• It improves the quality of information from
  reporting entities
• It allows an easier exchange of information
  between supervisors.

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1. Harmonizing banks reporting in Europe

• And CEBS decided to recommend the use of XBRL
  for this common reporting, because
• XBRL allows to build a common data dictionary
  based on the European legislation
• With XBRL taxonomies, EU supervisors share common
  definition, in a common language, using the same
  IT technology and improving data quality
• Also, XBRL through its extensibility provides
  the necessary flexibility to adapt the data to
  national markets characteristics, with the risk
  of losing comparability if used extensively.
• In the medium-term, XBRL will allow supervisors
  to collect information in a decentralized way,
  and still benefit from the information-sharing,
  like in a centralized data base.

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1. Harmonizing banks reporting in Europe

• Reporting before and after

Supervisor 1
Supervisor 1
EU GroupReporting
EU GroupReporting
XBRL
Supervisor 2
Supervisor 2
XBRL
Supervisor 3
Supervisor 3
-Various data streams -Common
framework-Different reporting standards -Single
format -Manual processes -Automated data
collection
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1. Harmonizing banks reporting in Europe

• But the road to full harmonization is long, since
  technology alone cannot ensure identical
  definitions
• A first step was reached in 2007
• The technology was adopted by 12 countries in
  Europe using, as a basis, the common taxonomy
  provided by CEBS
• But the extensibility was used in a too
  extensive way, resulting in insufficient
  harmonization for cross-border groups.
• CEBS decided in 2008 to review the framework in
  order to further reduce the regulatory burden by
• Streamlining COREP and FINREP, and
• Being more prescriptive, to enhance the
  harmonization.
• The new framework, currently under consultation
  for FINREP, will be introduced in 2012.

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• 1. Harmonizing bank supervisory reporting in
  Europe
• 2. Building a common reporting framework Banque
  de Frances SURFI project
• 3. XBRL a powerful tool to deliver more
  transparency

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2. Building a common reporting framework
SURFI project

• Building on CEBS recommendation, the Commission
  bancaire is changing its data collecting system,
  using XBRL
• First step implementing COREP and FINREP, which
  implied
• to produce the French extension of the CEBS
  taxonomies,
• to limit as much as possible national
  specificities and the resulting reporting burden
  for cross-border banks,
• to manage, at the same time, two different sets
  of data, the former traditional database BAFI and
  the COFINREP data in XBRL.
• Second step MODEC a project for the civil
  status data collection
• It will offer a state-of-the-art, interactive
  software dedicated to civil status processes.
• Third step the SURFI project it is about
  modernizing and streamlining regulatory and
  statistical data collection from banks.

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2. Building a common reporting framework
SURFI project

• The Commission bancaire collects both supervisory
  and statistical data from financial institutions,
  acting for all departments of Banque de France
• Main features of the present DATA collection
  system
• Reporting entities MFIs (Monetary Financial
  Institutions) according to the French law, and
  investment firms
• Data coverage Data for both statistical and
  prudential purposes, but balance of payments data
  partially out of the scope
• Same data base, but limited harmonization of
  concepts and reporting formats with, as a result,
  double collection of a number of data
• Technical side a database system based on a
  proprietary format developed in 1993, therefore
  somewhat obsolete.

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2. Building a common reporting framework
SURFI project

• Building on COREP and FINREPs previous
  experience, SURFI was launched by mid 2007
• Main objectives of the project
• To harmonize data collection for supervisory and
  statistical purposes, in order to eliminate
  double collection of data
• To reduce the reporting burden by streamlining
  the reporting requirements, leading to a
  reduction of about 25 of collected data
• To take fully into account the ECB statistical
  revisions and fully articulate both projects
  schedules.
• In a nutshell
• To switch from a template-based approach, to a
  data-based approach, benefiting from our XBRL
  expertise and experience from COREP and FINREP.

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2. Building a common reporting framework
SURFI project

• After two years of intense work of Banque de
  Frances statisticians and supervisors as well as
  technical discussions with the industry, the
  result is a new information system, called SURFI,
  for Unified FInancial Reporting System
• UNIFIED is the key concept
• Data collected for statisticians and supervisors
  have been harmonized, for the data collected on a
  solo basis, since monetary statistics are based
  on solo accounts,
• Each data is collected once and serves different
  purposes,
• And it is unified, because COREP and FINREP
  will join the future database.
• The new reporting system is scheduled to start on
  30 June 2010.

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2. Building a common reporting framework
SURFI project

• After COREP and FINREP, SURFI is another
  milestone in the harmonization and reduction of
  reporting
• The idea that each data should be able to address
  all kinds of needs is at the heart of the process
  of reducing the reporting burden for the
  industry
• The European Central Bank and CEBS have created a
  joint working group with a medium-term
  perspective in order to prepare the next steps.
• This Joint Expert Group on Reconciliation aims at
  finding additional bridges between statistical
  and prudential needs, in order to further
  reconcile both sets of concepts and definitions.
• As a first step, a data dictionary has been
  produced in order to compile different concepts
  et definitions.
• Although the exercise is highly challenging, and
  will take time, it clearly represents a useful
  step towards an harmonization of reporting.

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2. Building a common reporting framework
SURFI project

• The SURFI taxonomy which is almost completed (the
  final version will be issued before the end of
  the month) presents the following
  characteristics
• A large taxonomy to address different needs
• About 2400 elements are defined, mostly
  accounting and prudential data
• 23 dimensions are managed, which is a high
  number, as each data has to be analysed under
  different angles, depending on its end user.
• A state-of-the-art structure, a modularized
  structure
• A single taxonomy including a number of
  sub-taxonomies
• to implement controls between the different
  templates.
• SURFI will experiment the new Formulae
  specification
• The SURFI taxonomy will be one of the first to
  make use of the recently approved specification,
  which allows to include different types of
  controls within a taxonomy.

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• 1. Harmonizing banks supervisory reporting in
  Europe
• 2. Building a common reporting framework SURFI
  project
• 3. XBRL a powerful tool to deliver more
  transparency

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3. XBRL a powerful tool to deliver more
transparency

• Current financial crisis has demonstrated the
  paramount importance of transparency to restore
  confidence
• In the search for relevant and accurate
  information, XBRL has played an important role
  for supervisors and market participants, in 3
  areas
• 1. In the harmonization of supervisory
  reporting, and therefore practices, in Europe,
• 2. In the development of a better regulation,
  committed to reduce, to the extent possible, the
  reporting burden for the industry,
• 3. And by contributing to enhanced confidence
  through increased transparency.

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3. XBRL a powerful tool to deliver more
transparency

• 3.1. The harmonization of supervisory reporting
  and practices in Europe
• A single market has to be regulated and
  supervised with common instruments Reporting is
  a key part of the supervisory process.
• It is part of the level playing field and a
  precondition to foster information sharing
  between supervisors. It also contributes to the
  development of a common supervisory culture,
  allowing each group to be supervised in the same
  way.
• Harmonization in the banking sector has still to
  be improved but is already well on his way.

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3. XBRL a powerful tool to deliver more
transparency

• 3.2. The development of a better regulation
  with the reduction of reporting burden for the
  industry
• Promoting a better regulation common reporting
  should not mean more information, but more
  relevant information and common data definitions
• A prerequisite is an in-depth assessment of
  supervisory needs.
• Simplification of reporting requirements should
  go along more relevant analysis.
• Reducing the reporting burden, in particular by
  eliminating double collection of data
• As an free and open standard, XBRL allows to move
  from costly regulators proprietary solutions
• Its data structure flexibility makes it easier to
  adapt it to new regulations.

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3. XBRL a powerful tool to deliver more
transparency

• 3.3. Restoring investors confidence through
  increased transparency
• The G20 has stressed the role of lack of
  transparency in the recent financial crisis
• It is difficult to analyse annual reports
  hundreds of pages to find the relevant
  information, understand the risks taken by an
  institution and make appropriate comparisons
• The complexity and opacity of structures such as
  CDOs, CMBS and other structured exposures has
  not allowed to make appropriate risk assessments,
  increasing the level of risk aversion.
• In the future XBRL will help
• Collecting clear and comparable information,
  based on definitions elaborated by interested
  parties (industry, regulators, investors),
  contained in open and public taxonomies
• Receiving enhanced quality data and treating them
  in an automated and flexible way, reducing time
  of analysis and improving reactivity.

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3. XBRL a powerful tool to deliver more
transparency

• Initiatives taken so far to benefit from this
  technology
• The decision recently taken by the SEC to make it
  mandatory for public companies to submit their
  financial statements in XBRL is a very promising
  development, as well as similar initiatives in
  Asia
• In Europe, bank supervisors have led the way in
  the regulatory field
• Also in Europe, annual accounts legal deposit has
  now been automated, using XBRL in about 10
  countries, providing easy availability of hundred
  thousands accounts for analysts.
• Those are encouraging start. But more has to be
  done on order to fully take advantage of this
  standard.

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Conclusion

• XBRL is an efficient answer to the increasing
  need for transparency
• XBRL is an adequate answer to the CEBS
  objectives to foster convergence in supervisory
  reporting and practices in Europe
• XBRL also contribute to reduce reporting burden
  for the industry
• XBRL is the Banque de Frances reporting standard.

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Thank you for your attention.