Response to cP on GLs Guidelines on harmonised definitions and templates for funding plans of credit institutions
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It can be concluded from point 27 of the explanatory remarks on template P02.06.01 and the example included therein that the information requested on structural currency mismatches is to be provided not only for significant foreign currencies but also for the respective reporting currency. We fail to understand how currency mismatches in the (home) reporting currency can occur and should therefore be grateful for an explanation or clarification from the EBA in this regard.
In addition to that, other instructions lack accuracy. For example:
Assets (P01.01), Row 010: the heading says: “Cash and cash balances at central banks”, whereas the instruction refers solely to the definition of cash balances at central banks. It is not clear what the report is requesting in the designated cell. Only cash balances at central banks? Including cash balances? And what about other demand deposits that are included in FINREP reporting? Will they need to be considered as well?
Please note that a proper alignment with FINREP is only possible with exact FINREP references to FINREP data points in the format “Form.Colum.Row” and differentiation according to whether reports are for IFRS or nGAAP users.
1.1 Do respondents agree with the proposed breakdown of “Total long-term unsecured (original maturity >=1 year)”?
No1.2 Otherwise, which breakdown would you suggest?
NoTemplate P02.02 has been expanded to include additional public sector and Central Bank sources of funding. Do respondent believe that now this template covers all forms of public sector and central bank sources of funding or should additional forms of sources be included?
No3.1 Do respondents agree that information on currency breakdown after hedging (template P02.06) will provide effective insight into possible currency mismatches?
GBIC: No, we disagree. The bank’s foreign currency loans/deposits are hedged to EUR on a portfolio basis; a breakdown into single loans/deposits is not possible or would, at most, only represent assumptions. Therefore, for these positions, all hedging activities must be included in a separate, dedicated FX hedging category, with one line for assets and one line for liabilities.3.2 Does the information reflect banks’ FX management approac more information to better reflect banks’ FX management?
GBIC: Before proposing an additional information request, clarification of the definition of “currency mismatch” would be necessary, i.e. how is a currency mismatch exactly measured?3.3 Are the instructions are clear enough?
GBIC: Unfortunately not; more detailed instructions would be necessary.3.4 If the instructions are not clear please indicate how they could be improved.
GBIC: Please include exact FINREP references to FINREP data points in the format “Form.Colum.Row” especially for the reporting lines “050 Other Financial assets” and “110 other Financial Liabilities”. In addition to that, further information is needed on natural hedges.It can be concluded from point 27 of the explanatory remarks on template P02.06.01 and the example included therein that the information requested on structural currency mismatches is to be provided not only for significant foreign currencies but also for the respective reporting currency. We fail to understand how currency mismatches in the (home) reporting currency can occur and should therefore be grateful for an explanation or clarification from the EBA in this regard.
Do respondents agree with the possibility to have “retained issuance” for each of the instruments included in template P05.00? If not, could you please indicate which ones should be maintained and which ones should not and the reasons for it?
GBIC: Since we may only use secured issuances for refinancing operations with central banks, only retained issuances for these categories seem to provide information.5.1 Which methodology do you apply to calculate carrying amounts for future issuances (please describe as detailed as possible and highlight any problem with that calculation)?
GBIC: some of our members use nominal amounts for planning purposes.5.2 Are you of the opinion that reporting maturing and new issuance volumes (as defined in P 05.00) as nominal amounts would better reflect your planning procedure and approach and do you believe that this alternative is preferable?
GBIC: Yes, we believe so. Planning issues are better reflected with nominal amounts (i.e. non-retained issuances, issuances retained). Yet, for transparency reasons and for the sake of harmonisation, actual positions should be reported according to FINREP.6.1 Do respondents believe that these movements could occur too often or be big enough so that including them as inflows or outflows as explained above and in the instructions may distort the analysis of the information?
GBIC: No, we do not believe that these movements could occur too often.6.2 If the answer to the 6.1 is positive, which would be the best way for the respondents to report this information?
GBIC: No answer.7.1 Do respondents agree with amending the templates to align definitions with FINREP? Are there other definitions that could be further aligned with other parts of the EBA supervisory reporting framework?
GBIC: The “Template Related Instructions” lack explicit detailed references to FINREP data points in the format “Form.Colum.Row” and differentiation according to whether reports are for IFRS or nGAAP users. The previously shown references to FINREP tables, rows, and columns are not included any longer. Quoting references to FINREP definitions (Annex V) without including the relevant FINREP tables hampers efficiency and user friendliness – which were supposed to be the main reason for this harmonisation exercise.7.2 Do respondents agree that alignment of definitions will facilitate reporting production process?
GBIC: For banks applying IFRS for accounting purposes, in general, yes – if concrete references to FINREP tables, rows, and columns are included. For banks applying n-GAAP, kindly see our general remarks on EBA’s efforts to harmonise funding plan reporting.In addition to that, other instructions lack accuracy. For example:
Assets (P01.01), Row 010: the heading says: “Cash and cash balances at central banks”, whereas the instruction refers solely to the definition of cash balances at central banks. It is not clear what the report is requesting in the designated cell. Only cash balances at central banks? Including cash balances? And what about other demand deposits that are included in FINREP reporting? Will they need to be considered as well?
7.3 Are there other aspects in the template design or further integration with FINREP reporting technical package that could help in data production process?
GBIC: We believe that 28 February as a reporting date is too early and does not provide reporting banks with sufficient time. Please bear in mind that within the first two months of a year banks prepare their financial statements and for auditing of these. In addition to that, banks will also finalise and publish their disclosure reports within a given period. Consequently, as an alternative reporting date we advocate 31 March.Please note that a proper alignment with FINREP is only possible with exact FINREP references to FINREP data points in the format “Form.Colum.Row” and differentiation according to whether reports are for IFRS or nGAAP users.