COREP FINREP Reporting: A Primer

In response to the global financial crisis, the European Commission decided that it was time that high quality regulatory reporting was implemented by scrutinizing the financial data of companies in much more detail. Consequently, to align with the international bank capital requirements, on 20^th July 2011, it submitted a number of proposals to implement the recommendations on Banking Supervision proposed (commonly known as the Basel III) by the Basel Committee.

Under the Commission’s proposals, the current Capital Requirements Directive (CRD) has been divided into two legislative instruments: the Capital Requirements Regulation (the CRR) and the CRD IV Directive.

Through its Capital Requirements Directive (CRD) IV, the European Commission has made it mandatory for the European Banking Authority (EBA) to develop Implementing Technical Standards (ITS) related to supervisory reporting requirements. Besides the main goal of aligning the prudential requirements across European countries, CRD IV has also made proposals on corporate governance and remuneration. In response to this mandate, the EBA has developed Common Reporting (COREP) and Financial Reporting (FINREP) as two frameworks that will apply across Europe.

COREP and FINREP: An Introduction

COREP is the framework for the Capital Requirements Directive reporting of risk (Basel III) under 5 components: Capital Adequacy, Group Solvency, Credit Risk, Operational Risk and Market Risk. This came as a solution to the problems faced by Credit institutions and Investments Firms in taking risk related decisions in a timely manner during the great European financial crisis at an earlier period. COREP was adopted by the Financial Services Authority (FSA) for the UK banking industry from 31 December 2012.

The FSA has mandated that in the UK, COREP will apply to all Credit Institutions and the Investments Firms who are regulated under IFPRU (the FSA’s prudential sourcebook for Investment Firms).

While COREP is a capital reporting regime, FINREP is its financial counterpart. It is a framework given by EBA for reporting financial (accounting) information to the regulator which will be applicable to all Credit Institutions in the European Union. Banks must now plan to adjust their reporting models and requirements to adhere to the technical standards published by the EBA on 26 July 2013.

Between COREP and FINREP, the latter is narrower in its scope because it applies to Credit Institutions reporting on a consolidated basis applying IFRS (International Financial Reporting Standards). COREP, on the other hand requires consolidated reporting as well as solo reporting entity by entity.

Objectives

At the heart of these two frameworks, COREP and FINREP, lies the main goal of empowering banks with greater capabilities to aggregate risk data and high quality internal risk reporting practices. The main objectives can be summarized as:

To aid the senior management in banking organizations in improved financial and risk decision making, as well as strategic planning by enhancing the very structure of regulatory reporting.
To facilitate trend predictions and thereby macro and global assessment of risk by creating a common basis for furnishing regulatory information.
To make regulatory reporting faster and more standardized by establishing a central repository for European banking data.
To bring the European reporting requirements onto a single common platform and eliminate the deviations caused by different supervisors in the EU.

Impact on Organizations

There is a significant impact on organizations as far as implementation is concerned. Banks have to grapple with the implementation of multiple new reporting regimes by dedicating substantial financial and human capital resources. While some of the data sets under COREP/FINREP are completely new (for e.g. replacement of FSA reports), overall the frameworks require data at a much more granular level. As a result, organizations need to review data they currently collect, conduct a gap analysis and identify the additional data needs, to include the additional data reporting.

The other new aspect that comes in with COREP and FINREP is mandatory XBRL reporting. This will require firms to review their reporting model and software. Software applications like MS Excel may no longer be able to handle the level of granularity required now.

Under FINREP alone, the scope has expanded both in the number of templates for submission and the level of detail:

53 new forms/templates with 6,500+ data fields
Quarterly reporting is mandatory and submissions are due within 42 calendar days after the quarter ends

Moreover, re-submission of audited figures is also mandatory (for companies who are subjected to a regulatory audit, the data must be resubmitted once the audit is complete).

Watch this space for more details, coming your way soon.

Why DataTracks?

Choosing DataTracks for your COREP and FINREP reporting solutions ensures you partner with a trusted leader in financial reporting automation and compliance. With over 19 years of experience, we serve 28,000 clients across 26 countries, delivering more than 400,000 reports. Our expertise and cutting-edge technology provide comprehensive, reliable, and efficient solutions tailored to meet the stringent requirements of COREP and FINREP frameworks. Trust DataTracks EU to enhance your regulatory reporting processes, ensuring accuracy, timeliness, and compliance every step of the way.

FAQs on COREP & FINREP Reporting

What is COREP Reporting?

COREP (Common Reporting): A framework focusing on capital adequacy and risk, covering aspects like Capital Adequacy, Group Solvency, Credit Risk, Operational Risk, and Market Risk. It applies to Credit Institutions and Investment Firms under IFPRU in the UK and requires both consolidated and solo reporting.

What is FINREP Reporting?

FINREP (Financial Reporting): A framework for reporting financial (accounting) information to regulators, applicable to Credit Institutions in the EU under IFRS. It introduces detailed forms and templates, mandating quarterly reporting and resubmission of audited figures.

What are the main objectives of implementing COREP and FINREP?

The primary goals include enhancing financial and risk decision-making, facilitating trend predictions and macro/global risk assessments, standardizing and expediting regulatory reporting, and harmonizing reporting requirements across the EU to eliminate deviations caused by different supervisors.

How do COREP and FINREP impact organizations?

Organizations face significant impacts, including the need for substantial financial and human resources for implementation. The frameworks require granular data collection, leading to data reviews and gap analyses. Mandatory XBRL reporting necessitates updates to reporting models and software.

What are the reporting requirements under FINREP?

FINREP requires the submission of 53 new forms/templates with over 6,500 data fields. Quarterly reporting is mandatory, with submissions due within 42 calendar days after the quarter ends. Additionally, companies subject to regulatory audits must resubmit audited figures once the audit is complete.

What are the benefits of implementing COREP and FINREP for banks and financial institutions?

Benefits include improved risk management and decision-making capabilities, enhanced regulatory compliance, better strategic planning, and the ability to provide regulators with more accurate and timely information. This ultimately leads to a more stable and transparent financial system.

How does the implementation of COREP and FINREP affect the relationship between banks and regulators?

The implementation fosters a more collaborative and transparent relationship, as regulators receive consistent and detailed data, enabling them to provide better oversight and support to banks. This helps in preempting potential financial issues and promoting overall stability in the banking sector.