Response to consultation on ITS amending Implementing Regulation (EU) No 680/2014 with regard to operational risk and sovereign exposures

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Question 2: Could you please quantify the implementation costs (expressed in man days) that would arise when implementing the new reporting requirements on sovereign exposures as part the regular reporting framework? How would these implementation costs compare to a situation in which institutions were required to comply with ad-hoc data requests that are required (i) to comply with the EBA’s transparency exercises and (ii) to comply with competent authorities’ requests on institutions’ sovereign exposures (e.g. SSM short-term exercise)? [see page 17]

Although a standardized reporting is in general preferred compared to an ad hoc reporting which (slightly) changes for each reporting period, the cost of implementation for the proposed templates will be disproportionately high. It requires a huge IT change, as the reporting of FINREP and the reporting of COREP has to be merged. Not only IT efforts, but also a recurring production need will cause additional FTEs on both sides – accounting and regulatory reporting - in order to work together. The implementation of the sovereign templates as proposed within COREP reporting, using FINREP information will require combining both technical and procedural aspcects, which is new, complex and costly.

Another aspect is the reporting deadline. It would reduce the burden, if these templates would not have the same reporting deadline as all other COREP templates and would be due at least two weeks later.

Question 3: The threshold defined in Article 5 (b) 3 (a) exempts institutions that fall short of the threshold from the new requirements. Do you think that this threshold is appropriate so that (i) institutions with material sovereign exposures are required to report (and hence supervisors will have the relevant information for their assessments) while (ii) smaller and less complex institutions are more likely to be exempt from the new reporting requirements? [see page 17]

A threshold is welcome and appropriate.

Question 4: Is there a noteworthy difference in terms of costs between point (b) which requires a full country breakdown and point (c) which limits the breakdown to a total and domestic country? If there is a noteworthy difference, please try to quantify the cost difference and put it into context with the overall implementation costs that you expect with the new reporting requirements on sovereign exposures. [see page 17]

There is not much of a difference.

Question 5: Are the reporting templates related to sovereign exposures (C 33.01 and C 33.02) as set out in Annex I and related instructions in Annex II sufficiently clear? In case of uncertainties on what needs to be reported, please provide clear references to the respective columns/rows of a given template as well as specific examples that highlight the need for further clarifications. [see page 18]

Generally the rows are defined as exposures according to the CRR, whereas in the columns all the amounts are defined according to FINREP. Which amounts would be needed at the end in the reports C 33.01 and C 33.02?
If the values either from COREP or from FINREP templates will be taken (Exposure or Carrying value), it cannot be compared or reconciled to each other.

It is not clear how IMM Netting has to be handled. In COREP netted future expected exposure values are reported, where FINREP does not have such netting and such values.

Furthermore it is not clear how in template C33.02 the residual maturity for cross product netting should be reported, as for cross product netting this information is not available.

Name of organisation

Austrian Federal Economic Chamber, Division Bank and Insurance