26 January 2005
At its meeting in London on 18 January 2005, the Committee of European Banking Supervisors (CEBS) agreed to start a formal consultation with the banking industry, market participants and end-users to achieve a common framework for reporting of the solvency ratio by credit institutions. The consultation starts today and the consultation period will be three months.
The solvency ratio is used by banking supervisors to assess institutions' risks and their related capital adequacy. According to the rules on capital requirements banks and investment firms must have enough financial resources to cover their risks and protect depositors.
The question of a common reporting has been addressed by the Commission and discussed at the ECOFIN Council, which encouraged CEBS to work on this issue. In addition to improving the exchange of information between supervisory authorities, the proposed common reporting framework is a response to the requests expressed by the banking industry. Groups operating on a cross-border basis within the Single Market are presently required to prepare and submit their supervisory reporting according to different national formats and using different technologies. Greater commonality of approaches would substantially reduce their compliance burden. This should contribute to removing a potential obstacle to financial market integration.
A data model for the common framework for the solvency ratio reporting has been designed with the aim of remaining neutral in regard to independent information systems. The recommended solution is based on the XML/XBRL (eXtensible Mark-up Language/eXtensible Business Reporting Language) protocol which will allow banks to take full advantage of the framework.
All the required information will be brought together within a data model and templates provided by CEBS. The intention is to complete an XML/XBRL coding for this framework before June 2005.
CEBS is also working towards streamlining the reporting requirements for the consolidated profit and loss account, the balance sheet and the annexes to the financial statements. A consultation paper on this is planned for the end of March 2005.
The implementation of new International Financial Reporting Standards (IFRS) and the new Capital Requirements Directive provide the EU with a unique opportunity to harmonise the data framework, as all competent authorities and banking institutions will need to adapt to new reporting requirements. The benefits for cross-border groups should be achieved whilst limiting the burden for small, local banks.
Cover Note on Common Reporting
Consultation Paper on Common Reporting (pdf-file)
Common Reporting Templates (xls-file)