Technical standards on disclosure and reporting on MREL and TLAC

Pursuant to the Bank Recovery and Resolution Directive (BRRD), banks will be obligated to meet the requirements for the minimum level of own funds and eligible liabilities and total loss-absorbing capacity – MREL and TLAC.

After the global crisis on the financial market initiated in the United States (2006-2008) and the financial crisis in Cyprus (2013), more countries are gradually introducing regulations aimed at increasing the banks capital security to prevent similar situations in the future.

The Resolution regulations and new capital adequacy standards – MREL and TLAC have become the key to increase the banks capital security.

The Resolution regulation is a mechanism for banks operating in the territory of the European Union, which provides tax payers money protection, as the bankruptcy or restructuring process is carried out without involving public funds – the burden of saving financial institutions has been transferred from citizens (bail-out) to shareholders (bail-in).

MREL and TLAC – what are they?

MREL (Minimum Requirement for own funds and Eligible Liabilities) is a prudential requirement that will be applicable to all banks in the European Union.

Typical resolution strategies, such as a bridge bank, takeover or bail-in, are to be the primary strategies only for banks with critical functions. The condition for the successful implementation of the Resolution process is that the entity meets the MREL requirements, which includes own funds and eligible liabilities.

The TLAC (Total Loss-Absorbing Capacity) requirements have to be reported by banks operating globally, recognized as institutions of high systemic importance (GSII).

The basis for determing both requirements – European and global – is the level of risk-weighted assets.

Due to the events related to the COVID-19 pandemic and the implementation of BRRD2, the deadline for meeting the MREL requirement has been extended to January 1, 2024.

MREL and TLAC reporting

In accordance with the taxonomy defined by the EBA under Framework 3.0, the reports that banking entities will have to prepare cover five main areas of assessment relevant to determine the quality of TLAC / MREL instruments, namely:

  • availability,
  • subordination,
  • capacity for loss absorption,
  • maturity
  • other aspects including governing law, tax and regulatory calls, and tax gross-up clauses.

The report contains 15 recommendations: 4 in the area of subordination, 7 in the area of capacity for loss absorption, 3 in the area of maturity and 1 on tax gross-up.

Who will be required to report MREL / TLAC?

With regard to MREL reporting, the following will be required to report:

  • Domestic entities – obligatory (financial institutions and regulators and all banks)
  • Non-domestic entities – optional (holdings).

While in relation to TLAC reporting, the reporting obligation will apply to:

  • Global Systemically Important Institutions
  • institutions being a part of systemically important institutions

MREL / TLAC reporting deadlines and frequency

For both MREL and TLAC reporting, the reporting frequency will depend on the reporting entity category.

Reports are submitted:

  • quarterly – by obligated entities within G-SII,
  • semi-annual or annual (end of the accounting period) – by other financial institutions.

The first reference date for reporting in accordance with the ITS is the 30 June 2021 (reporting framework 3.0) both for MREL and TLAC.

MREL / TLAC reporting systems

The multitude of regulations to which banking sector institutions are subject makes it more and more difficult to meet all reporting requirements. Many entities struggle with significant problems related to, inter alia, the difficulty of introducing employees to new reporting obligations.

To facilitate the fulfillment of obligations, banks are looking for systems that will simplify the reporting process as much as possible. In response to their needs, companies providing software for financial institutions offer systems that meet the Resolution requirements, and adapt their solutions to emerging reporting obligations, such as the MREL / TLAC introduced by EBA.

One of such systems is aSISt, which is a highly specialized XBRL reporting tool. It is a proven tool that has been successfully used for many years by many European commercial banks and supervisory institutions, as well as 100% of Polish cooperative banks.

If you are interested in receiving detailed information about the aSISt system and learning about the offer for the MREL, TLAC or Resolution reporting system, please contact us. Our specialists will prepare with pleasure an offer dedicated to your reporting needs.

If you are interested in a reporting tool that includes resolution or MREL, please contact us


References:

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EUCLID Project addressed to National Supervisors

EBA EUCLID PROJECT

New EBA Project EUCLID (The European Centralized Infrastructure for Supervisory Data) aims to improve the collection, analysis and dissemination of supervisory data of banks. The main objective of EUCLID is to extend the collection of supervisory data from the current statistical sample consisting of the 200 largest banks in the EEA (European Economic Area) to the full range of individual banks and banking groups in the EEA. EBA expects data to be compliant with the technical standard (EBA ITS, XBRL), so it is necessary to transform the data. The data volume is also problematic, with hundreds or even thousands of reports that should be sent at the end of the quarter.

Our solution – XBRL Processor

Many central banks are considering introducing the EBA ITS standard directly by bank, but there are alternatives that can be used to adapt current systems to this standard. The XBRL Processor is such an alternative.

The XBRL Processor is an automatic data processing system that meets the needs of centralized management of source data and automatic input data. The application facilitates automatic conversion to the XBRL format required by EBA.

The XBRL Processor main capabilities:

  • data mapping from various data sources to XBRL structures
  • review and editing of XBRL reports
  • validation against XBRL Formula validation rules
  • automation of the transformation/validation process
  • desktop and www access to reports

Our solution allows automatic transmission of reporting data with their automatic validation. XBRL Processor also lets you view reports for verification with the possibility of validation and visual presentation of errors and allows you to achieve compliance with EBA requirements, e.g. business cards, filing rules etc.

Choosing the XBRL Processor you gain maintenance-free creation of reports filled with data, efficient support for data calculation and adaptation of the collected data in another format to the XBRL format required by the EBA.

This XBRL processor is ready to use immediately, due to the fact that using our software is intuitive.

If you require more information, contact us and see our information leaflet!


FOR MORE INFO ABOUT SOLUTION COMPLIANT WITH EUCLID PROJECT, PLEASE CONTACT US:

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New EBA ITS Framework 2.9 and project EUCLID – what does it mean for European banks?

ARCHIVAL POST

This is the archival post about EUCLID Project. If you are looking for newest information about the EUCLID Project, click here. If you are looking for the EUCLID reporting solution, click here


The EBA ITS Framework 2.9, on which reporting will be based, will be implemented in several stages. The first part of the  EBA ITS Framework 2.9 is to take effect from December 31, 2019, which means that the first reporting can be expected in January 2020.

As you can read on the EBA website, the assumption of the project is to implement the reporting changes in reports: RES, Liquidity (LCR), Corep, Finrep and Benchmarking ITS.

The periods of publication of the new framework are presented in the following chart:

How will current reports change?

Resol:

  • Changes in existing reporting requirements – adjustments and additional templates.

Corep:

  • Changes to align with new securitization framework.

Finrep:

  • Changes concerning non-performing and forborne exposures reporting, P&L and IFRS16.

Liquidity:

  • Changes to align with the LCR amending Act.

Supervisory Benchmarking:

  • Changes to reporting requirements as specified in the ITS on supervisory benchmarking of internal models.

Everything points to the fact that the EBA prepares us to fully integrate the EUCLID project. Which aims to increase transparency of European banks’ data, including through extend the collection of supervisory data from the current statistical sample consisting of the 200 largest banks in the EEA (European Economic Area) to the full range of individual banks and banking groups in the EEA. Each report will have to be sent in the technical standard required by EBA (EBA ITS, XBRL). That means all banks will be obliged to adapt to new requirements.

For official information about EUCLID project visit eba.europa.eu

REPORTING SOLUTION FOR PROJECT EUCLID

In response to the needs of central banks, we have prepared a reporting system dedicated to the EUCLID project.

The XBRL Processor is an automatic data processing system that meets the needs of centralized management of source data and automatic input data. The application facilitates automatic conversion to the XBRL format required by EBA.

If you are looking for EUCLID solution, click here for more info.




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Implementing Technical Standard on resolution planning

Gathering accurate and relevant information about institutions is key for the resolution authorities, therefore, the European Banking Authority (EBA) consulted on changes to the Implementing Technical Standards (ITS) on information for resolution planning in 2019.

The main purpose of this changes is harmonization of data collections and facilitating data exchange within resolution colleges. The EBA recently has started preparations for the framework 2.9 release, which includes resolution plans reporting.

The first RES report should be submitted until 31st of May 2019.

Publication of the revised reporting requirements is expected on April 2019. Changes will come into force on December 2019.

All changes in reporting will be introduced for all aSISt users with the RESOL module.

To ask about availability in your country and to get more information about aSISt with RESOL module, please complete the form below:

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A reporting solution for consulting companies

Are you a consulting company reporting EBA ITS on behalf of your clients? Have you chosen reporting software to do it effectively? Check out why aSISt may be the best choice for you and your clients.

All banks and credit institutions from the European Union countries are obliged to prepare reports and send them to the national supervisors (NCAs). The NCA validates reports and delivers them to the EBA or EIOPA.

Some institutions manage their reporting cycle on their own, others hire professional consulting companies that not only help to prepare reports but also provide advisory consultations or internal analyses.

Companies look for powerful tools that support the full reporting cycle. Out of many features of reporting software, a possibility to prepare reports on behalf of multiple entities is one of the most desirable.

Reports for multiple entities in one complex solution – case study

A consulting company was looking for a reporting solution that would allow for report preparation on behalf of its multiple clients in one system. The tool was to enable preparation of all reports from the EBA ITS package.

The solution

The implementation of the aSISt application with the entire EBA ITS report package. Thanks to the modular character of the application, it can be easily expanded with additional functional modules. In order to provide a possibility of reporting on behalf of many entities, the basic tool was expanded with the Units Module.

As the number of entities increases only the license file is updated while the already prepared reports remain in the same system.

aSISt supports the full reporting cycle. The subsequent steps of the report preparation process are:

  • data input, editing and completion,
  • report verification and reconciliation,
  • validation and archiving (saving, printing, etc.),
  • report generation,
  • correction of historical reports.

Each report for every client is processed in the same way, with full auditability of operations carried out by the user.

Internal analyses – the desired software

The aSISt application has many additional modules that improve daily work with reports. Out of many functions, consulting companies often choose the Data Analysis Module.

The module supports the creation of analytical reports with the use of data from the prepared obligatory reports. In the Data Analysis Module, users can easily:

  • perform their own economic analyses,
  • define report templates,
  • create many types of reports,
  • create variables in order to standardize the use of indicators in different reports,
  • edit, regenerate or delete previously created reports,
  • add a verbal description of analytical reports,
  • export reports to Excel files,
  • create brochures with graphical elements, publish them in the PDF format and print easily.

To receive more information about aSISt EBA ITS for consulting companies, please contact us.

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