FINREP

Since the ECB published the final version of the Regulation on the Reporting of Regulatory Financial Information in 2015, financial reporting has affected almost every credit institution in the meantime. There are reporting obligations for Group institutions under IFRS where such have regulatory significance as well as for smaller individual institutions under the Commercial Code (HGB), with the type and scope of these obligations being determined by the significance and size of the institution and the accounting regulations to be applied.

Adjustments to FINREP Templates due to the Introduction of IFRS 9

The introduction of IFRS 9 has resulted in extensive changes to the FINREP templates according to IFRS, which are to be applied for the first time as of the reporting date of March 31, 2018. However, the so-called nGAAP templates were also adapted for Commercial Code (HGB) users in order to maintain consistency with IFRS reports. In addition, the opportunity was seized to implement potential for optimization that arose in past years from the practical experience of the nGAAP users. Less important institutions must apply the revised nGAAP templates for the first time as of the reporting date of March 31, 2019.

The replacement of IAS 39 by IFRS 9 led to adjustments in almost every template for the FINREP templates according to IFRS. On the one hand, the amended IFRS 9 holding categories resulted in new FINREP accounting portfolios, and on the other hand, it was necessary to implement both the introduction of the expected credit loss model with the 3-step approach for determining risk provisioning and the adjustments relating to hedge accounting in the FINREP templates.

The introduction of the new FINREP templates in accordance with IFRS eliminated the conceptual weaknesses in the previous definition of the gross book value. There are now different derivations on the basis of the new FINREP accounting portfolios:

However, the so-called nGAAP templates have also been adapted for HGB users to ensure consistency with IFRS reporting. Furthermore, the opportunity was taken to implement optimisation measures identified in recent years based on the practical experience of nGAAP users. Less significant institutions were required to apply the revised nGAAP templates for the first time as of the reporting date of 31 March 2019.

Milestone Reporting Framework 2.9: Extended reporting requirements for NPEs and forbearance

A key focus of Reporting Framework 2.9 was the extended reporting on non-performing exposures (NPEs) and forbearance exposures from the reporting reference date of 31 March 2020. A modular structure was chosen for this purpose, which on the one hand included expanded reporting forms for all institutions, but on the other hand also introduced new reporting forms to be completed additionally by institutions with a balance sheet total of over €5 billion and an NPE ratio of more than 5 per cent. The extension of reporting requirements took account of the high regulatory and economic significance of non-performing loans and highlighted the measures taken by institutions to deal with NPEs.

In addition, Framework 2.9 implemented changes to reporting on the profit and loss account and on leasing:

Milestone: Reporting Framework 3.0: Harmonisation of regulatory requirements

With the entry into force of Reporting Framework 3.0 in 2021, all supervisory reporting requirements for CRR institutions were consolidated into a single framework. This necessitated adjustments to individual FINREP tables as well as to the definition of reporting content. For example, the definition of NPE and forbearance data has also been harmonised, with the relevant requirements now relating exclusively to the CRR.

In addition to the changes resulting from harmonisation efforts, Reporting Framework 3.0 also introduced new rules for the reporting of POCI exposures. These are exposures that are already subject to impairment at the time of acquisition. These are no longer reported as part of Stage 3 exposures, but are now shown in separate columns.

Support from WTS Advisory in relation to FINREP

The ongoing adaptation of the reporting content within the FINREP templates will continue. Each change not only necessitates a review and, where necessary, adjustment of the reporting content, but also results in changes to the reporting structure.

WTS Advisory has successfully carried out various FINREP projects for both IFRS and HGB institutions and has many years of experience in this field. It provides advice on resolving outstanding issues arising from new regulatory requirements or changes to accounting standards, reporting structures and processes. As part of a review, WTS Advisory checks the derivation of reporting content from the accounting system and ensures that it can be reconciled with other regulatory reports.

As part of FINREP process optimisation, WTS Advisory provides support ranging from the implementation of semi-automated reconciliation processes for small and medium-sized institutions to the full automation of end-to-end processes for report generation.

Please do not hesitate to contact us if you are interested or have any questions.