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19 th XBRL International Conference “Reducing regulatory burden with XBRL: a catalyst for better reporting” June 22-25, 2009 Paris, France. Track 4 Title : How XBRL Facilitates the Electronic Collection of Financial Information for Credit Risk Rating, - PowerPoint PPT Presentation
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Track 4 Title: How XBRL Facilitates the Electronic
Collection of Financial Information for Credit Risk Rating,
Name: Igno J. Dekker, Business Architect, ABN AMRO Bank, The Netherlands.
Date: Thursday, June 25. 11.00 – 12.30
Flash back
Observations
Developments in banking sector
(Dis)Advantages Banking Taxonomy
Agreement Government and banks
Goal SBR NL: reducing administrative burden - by semantic and technical standardization - and ensure the connection between the taxonomy and the law
In 2007 the Dutch taxonomy was available: mission completed! - number of data elements dropped from more than 200.000 12.000 - in practice the taxonomy was used by professionals for interpreting law and regulations, and accounting practices - advantages of the Dutch taxonomy were and are beyond doubt - there was and is a growing interest in the concept - banks did not participate until October 2007
… but…
“What in it for me?“
Organisational problems
Is there a political and corporate need?
Ultimately, it comes down to moderating the chain
Fulfil Basel II requirements
1. Program lending vs. Non-program lending 2. Automated creditscoring based on bankspecific models
Increase data quality: standardization and prevent data entry mistakes by electronically exchange of annual account information
Investigate the possibility of an online, realtime end-to-end credit process for program lending products
The need to get more credit specific information from the annual account data
15Est Credits (Introductie) d.d. 24/10/05
Service concept versus delivery concept(future)
Product
Commer-cialConsu-mer
Non-Program Lending
Program Lending
Service concept Delivery concept
CLIENT
CCU
SME
Preferred
Retail
In close cooperation between two banks, two financial intermediaries and the SBR operational office, the data elements for the credit process of Program Lending products are specified and defined
Starting point was: the Dutch Taxonomy on tax basis, built in 2007
Bank extension means that the data required for the credit process are standardized for the credit lines until € 1 mln.
Tax processes
Tax domaih
Tax Accounting
Process defin. Bankingand shared processesservices
Baseline tax Generic Baseline Baseline banking
Interconnected regulatory reporting
Acc
ount
ing
syst
em a
nd re
late
d in
tern
al c
ontr
ols
Data and report definitions
Process definitions
Quality control
Banking domain
The Dutch Tax Administration is interested in the total amount of fixed assets. The banks are interested in the tax and market value of the individual objects
The tax administration needs the total amounts of debtors and creditors. The banks are interested in the next specification:
Specify number/ amount Debtors & Creditors
0 – 30 days30 – 60 days60 – 90 days > 90 days
Data exchange to different parties (Tax Administration, Chamber of Commerce, Statistics Office) from one administration point
Taxonomy connected to accounting software. Data can be generated automatically.
Apply for credit can be answered online, real-time in the near future
Apply for credit via internet channel
Disadvantage Bank extension needs additional data on top of tax administration
No difference between commercial and fiscal annual account
Paper output will be replaced by electronical output
Validation of in between information means additional work
More attention for benchmarking
Disadvantage Decreasing efforts of accountant by standardization
One valuation standard
One point of data generation
No manual data entry
Higher frequency of data exchange. Improvement credit control
Increasing quality of data and credit risk models
Disadvantage It becomes much easier to apply for more than one quotation
Major problem:
Dutch Taxonomy and bank extension are defined, but how can both parties mobilize/”bootstrap” the market
Solution:
Joint efforts of Government and banks to stimulate the use of the Dutch taxonomy included the bank extension. Agreement signed on June.9th 2009