The AnaCredit project is an entirely new concept for the euro area owing to the level of detail required by the European Central Bank. Jean-Marie Trespaillé-Barrau, Manager of Invoke’s Regulatory Monitoring unit, explains this new regulation to us by means of 10 key questions.
1. AnaCredit: what is it?
AnaCredit is the acronym for Analytical Credit Datasets and refers to the project run by the European Central Bank (ECB) aimed at creating a harmonized statistical database on credits granted by financial institutions in Euro zone countries and/or that have joined the Single Supervisory Mechanism (SSM).
2. AnaCredit: what is its purpose?
In response to the financial crisis of 2008, the European Central Bank committed to exercising macroprudential supervision of the credit environment in the euro area.
In order to improve the existing macroprudential framework, the ECB decided to roll out harmonized reporting across the entire euro area, on a highly detailed level of granularity. The aim is to provide more coverage and comparability of the information collected in order to improve the responsiveness of this supervision, and thereby ensure better financial stability and a sustainable monetary policy.
3. Who is affected by the AnaCredit project?
- Resident credit institutions
- The subsidiaries of non-domestic credit institutions that are resident in a Member State of the Euro zone
- The branches of credit institutions that are resident in a Member State of the Euro zone
4. Which types of credit are affected?
The European Central Bank requires, for the time being, detailed information on all credits, apart from loans granted to natural persons, the cumulative value of which exceeds €25,000 per debtor. These include credit granted to companies, trade receivables, multiple debtor credit, financial leases, reverse repurchase agreements etc.
It should be noted that each regulator may implement different reporting thresholds from those of the ECB, in addition to a broader scope of credit, for example.
5. How is the collection of AnaCredit data organized?
Entities subject to AnaCredit must submit a report which is structured around 10 datasets split into two templates.
These 10 datasets enable the ECB to obtain more than 90 indicators on each observed credit, simultaneously covering information on the instruments, counterparties and protections provided.
It should be noted that the ECB gives free rein to National Central Banks (NCB) to adapt these arrangements according to their specific national collection characteristics.
6. When will the first reporting take place?
The ECB requires initial AnaCredit reporting based on data as of 30 September 2018.
However, it should be pointed out that European regulation requires an advance reporting of counterparty reference data as of 31 March 2018.
7. How often does the ECB collect AnaCredit reporting?
The majority of the datasets are sent on a monthly basis. It should be noted that while the ECB gives non-domestic branches a longer reporting period than resident credit institutions, these reporting periods are nevertheless adapted by each national regulator.
8. How is the AnaCredit project organized?
AnaCredit is a project that is part of a wider reflection by the ECB, which, in the long run, involves collecting granular data on all sensitive instruments of credit institutions.
As a consequence, AnaCredit will lead the regulated entities to adapt their information systems and their governance in order to be able to respond to future phases, now under consideration at the ECB.
While phase 1, which concerns the loans and deposits of legal entities, comes into force on the basis of data as at 30 September 2018, phases 2 and 3 of the project are still under consideration at the ECB.
9. How is AnaCredit reporting different from previous regulations?
Its defining feature is the level of detail of the data that will be sent to national and European supervisors. This level of granularity, never before seen in Europe, will enable the ECB’s analysts to produce reporting that is more accurate and therefore closer to the economic and monetary reality of the euro area.
10. How do you prepare for AnaCredit reporting?
It is evident that faced with this requirement for detail imposed by the ECB, data is more than ever the focus of all issues. The key challenges facing resident financial institutions are simultaneously the classification, availability and quality of data. AnaCredit reporting requires the implementation of advanced checks throughout the collection and reporting process.
In addition, institutions with establishments in several SSM countries must be attentive when it comes to national requirements. In fact, the ECB has allowed a considerable degree of flexibility for each national regulator with regard to the scope, definition and means of collecting data (format, time limits, frequency), which gives rise to sometimes significant differences between countries. Take, for example, the case of Ireland, where the Central Bank of Ireland (CBI) imposes no reporting threshold, or that of France where additional information on natural persons will be collected from 2018 onwards.