Implementing XBRL for a cross-border banking group
in Europe
Giancarlo Pellizzari
Head of Prudential Policy
Dexia Group
Paris, June 22nd to 25th, 2009
Agenda
Implementing XBRL for a cross-border banking group in Europe
Agenda
Introduction
What does XBRL mean for Dexia?
Experiences
COmon REPorting
FINancial REPorting
IFRS Taxonomy
Conclusion
2
Agenda
Implementing XBRL for a cross-border banking group in Europe
Introduction
Introduction
What does XBRL mean for Dexia?
Experiences
COmon REPorting
FINancial REPorting
IFRS Taxonomy
Conclusion
3
Introduction
Implementing XBRL for a cross-border banking group in Europe
What is Dexia ?
A group of approx. 250 entities, more than 28.000 staff members,
present in 37 countries (21 EU member countries)
4
Introduction
Implementing XBRL for a cross-border banking group in Europe
Our Environment
In terms of Reporting:
Public Reporting
–
–
Solo Financial Statements in local GAAP (or IFRS when allowed) and Conso Financial Statements in IFRS or local GAAP
(Dexia Group using IFRS at consolidated level)
Pillar III (Basel II public reporting)
Regulatory Reporting
–
–
–
–
–
–
–
COREP
FINREP
Pillar II
MIFID
ECB Statistics
SEC filings
Other local GAAP reporting (Schema A, BAFI, etc.)
Other Reporting
–
–
5
Tax
Legal/social
Introduction
Implementing XBRL for a cross-border banking group in Europe
Our Environment
STATUTORY
CONSOLIDATED
SAP
Holding
CONSO
DHLD
BE
CONSO
DBB
FR
LU
MAGNITUDE
COMMON PARAM
DBB
SPEC. LOCAL PARAM
DCL
DBL
6
CHECK
VISUAL
SCOPE
CHECK
MIS CONSO
ESSBASE
CONSO
DCL
CONSO
DBL
INTERNAL
REPORTING
EXTERNAL
REPORTING
Introduction
Implementing XBRL for a cross-border banking group in Europe
Complexity?
Basel II
Pillar I
Pillar III
Group
BE
7
IFRS
IFRS 7
Group
FR
LU
BE
FR
Group
LU
BE
FR
Solvency II
F/S
+ notes
Pillar III
Group
LU
BE
FR
BE (+group)
LU
Pillar I
BE
Introduction
Implementing XBRL for a cross-border banking group in Europe
Complexity? (Example)
Maximum Credit Risk Exposure is referred to in Solvency II, Basel II and
IFRS regulations.
Of course, as the regulations are different, a slight shift in the definition is
present and leads to distortions of the presentation of the same concept in the different
reports.
As highlighted on the next slide, the same information is requested in three
different reporting. A complete reporting under XBRL could help providing an
harmonized concept and avoid double or even triple entries for one information.
Furthermore, no precise and harmonized definition does exist, some reporting
companies are considering full exposure, other “non-depreciated” exposure etc..
Above the problem of definition, another challenge is to comply with all the
different interpretations for each country. Cross-border reporting turns out to be a real
nightmare.
 Find a definition internally that may fit all regulations.
8
Agenda
Implementing XBRL for a cross-border banking group in Europe
What does XBRL mean for Dexia?
Introduction
What does XBRL mean for Dexia?
Experiences
COmon REPorting
FINancial REPorting
IFRS Taxonomy
Conclusion
9
What does XBRL mean for Dexia ?
Implementing XBRL for a cross-border banking group in Europe
Why is XBRL interesting for a preparer?
Organizing the presentation of financial statements
True and fair view (Framework §46)
Respect of accounting standards use for preparation
…
and neutrality (Framework §36)
A good preparer must therefore compare regularly its financial statements with the ones of its
peers (information to be obtained from Financial Communication department or analysts surveys),
to be sure that its options are in line with the others
Therefore : benchmarking !
10
What does XBRL mean for Dexia ?
Implementing XBRL for a cross-border banking group in Europe
Why is XBRL interesting for an analyst?
Reviewing the financial statements
Base of presentation
Options selected in accounting standards
Valuation principles
Compare them with peers (Framework § 39)
Etc…
A good analyst must therefore compare regularly the Financial Statements, mainly the disclosures,
presentation and valuation policies, to be sure that the financial statements are comparable
Therefore : benchmarking !
11
What does XBRL mean for Dexia ?
Implementing XBRL for a cross-border banking group in Europe
The Past
Dexia is active in XBRL since 2003...
WHY?
We saw the regulators’ attraction to XBRL because it was the right IT language to fit
their needs in IFRS and Basel II reporting
XBRL was seen as a powerful tool for reducing administrative burden internally (Use
XBRL as a tool for more harmonization, flexibility and gain of time both vertically
and horizontally)
Importance of exchange of data in a cross border banking group (Internally and
externally)
Importance of having one language with all regulators
12
What does XBRL mean for Dexia ?
Implementing XBRL for a cross-border banking group in Europe
The Present
Dexia is still active in XBRL:
Participation (as much as possible) in regulators’ discussions on XBRL
Participation in XBRL International conferences
Thierry Nederlandt, Head of Accounting and Consolidation (Dexia Group), member of the
XBRL Advisory Council (XAC) of the IASC Foundation
Use of XBRL in various regulatory reporting in European countries:
COREP
FINREP
MIFID
Pillar II
Chosen for a flexible XBRL approach/tool (instead of a regulatory approach/tool)
allowing easy internal and external developing capabilities
13
What does XBRL mean for Dexia ?
Implementing XBRL for a cross-border banking group in Europe
The Present
Staying up to date on the current evolutions permits the group to stay aware of the future requirements that will
be applicable in the next steps of implementation of XBRL and to already prepare the staff and the processes in
order to enter easily in action for each update;
Dexia also answers to draft papers and taxonomies from IASCF and other regulators to support the financial
industry’s specificities and our vision.
Dexia is already adapting it’s IT infrastructure in order to benefit, internally, from the advantages of an harmonized
system.
Fast close
Comparability (Internal & External)
Mutualization of knowledge
Internal managerial information
etc…
14
What does XBRL mean for Dexia ?
Implementing XBRL for a cross-border banking group in Europe
The Future
XBRL to be used by more and more financial reporting stakeholders:
Stock exchanges
Rating agencies
Other…
XBRL to become not only an external language of communication
but also internal
Banks to create their own extensions or their own taxonomies?
Referring to the US where 12 different taxonomies are already in use; considering the
specificities of the industry.
Or having particular extensions and dimensions to keep one single reporting line but also
respecting industries specificities
15
Agenda
Implementing XBRL for a cross-border banking group in Europe
Experiences
Introduction
What does XBRL mean for Dexia?
Experiences
COmon REPorting
FINancial REPorting
IFRS Taxonomy
Conclusion
16
Agenda
Implementing XBRL for a cross-border banking group in Europe
COmon REPorting
Introduction
What does XBRL mean for Dexia?
Experiences
COmon REPorting
FINancial REPorting
IFRS Taxonomy
Conclusion
17
Experiences : COREP
Implementing XBRL for a cross-border banking group in Europe
“Pure Regulatory” Reporting
COREP (COmmon REPorting – Pillar I reporting under Basel II framework),
could become a real nightmare…
But will be adjusted to a REAL COmon REPorting in 2012 (?)
But CEBS has now committed
from
a single the
andEUunique
European
data
EachStarting
regulator
has changed
base taxonomy
(red
box)model, regulators modified it to fit
“to deliver EU-wide reporting
to
fit with
needs,
leading to several taxonomies and
their
ownitslocal
needs
formats in 2012 for all credit
huge costs for EU global banks
andthe
investment
firms
Some banks (locally active mostly) were also arguing institutions
for
modifying
European
located in the European Union”
model
Regulators also changed the definitions of concepts
Resulting for crossborder banks in a nightmare, where the same reporting element
may be computed and reported in many different ways (12 COREP for Dexia)
MIFID and Pillar II
Reported in XBRL only in Belgium
To be adopted by other EU countries ?
18
Experiences : COREP
Implementing XBRL for a cross-border banking group in Europe
Regulatory failure: risk with future evolution
We need to be careful any proposed regulatory intervention itself does not lead to
further regulatory failure. Two potential avenues for such regulatory failure are
described below:
If the proposal sets harmonised requirements for information that is so high that
compliance costs for firms are greater than benefits for the market as a whole; or
If the proposal requires a too low ceiling (key data are not collected, leading to
net costs) regulators will be no longer able to identify some risks effectively,
leading to an ineffective supervisory framework and, as a potential consequence,
to a higher risk of financial instability.
Source: CEBS: Expert Group on financial
Information, IA COREP May 5th, 2009
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Experiences: COREP
Implementing XBRL for a cross-border banking group in Europe
COREP XBRL workflow
Centralised
Fermat
CR
worksheets
Sharepoint
Decentralised
(If not under
XBRL)
CR
worksheets
CR
worksheets
CA-MR-OR
worksheets
XLS
XBRL tool
Assembling
XLS
Local Soft
Assembling
XBRL
Local format
Other regulator
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CA-MR-OR
worksheets
Agenda
Implementing XBRL for a cross-border banking group in Europe
FINancial REPorting
Introduction
What does XBRL mean for Dexia?
Experiences
COmon REPorting
FINancial REPorting
IFRS Taxonomy
Conclusion
21
Experiences
Implementing XBRL for a cross-border banking group in Europe
Dexia’s different reportings
direct filling
IFRS
taxonomy
FINREP
taxonomy
Others
Pillar III
taxonomy
Tax
Dexia
taxonomy
Regulatory reporting
(FINREP & Pillar III)
Other legal reporting (tax, statistical
etc.)
Public Financial
Statements
Internal reporting
SEC Proposes Roadmap Toward Global Accounting Standards to Help
Investors Compare Financial Information More Easily
22
Experiences: FINREP
Implementing XBRL for a cross-border banking group in Europe
FINancial REPorting
FINREP (FINancial REPorting) regulatory reporting based on IFRS
and having its own taxonomy
Same issue for FINREP than for COREP (but limited to specific parts)
FINREP taxonomy is based on the IASCF taxonomy
The link between both taxonomies to be stronger and stronger
Link between the FINREP and our Financial Statements
As per the examples that will follow, a large part of the required information is,
if not similar, very close.
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Experiences: FINREP
Implementing XBRL for a cross-border banking group in Europe
FINREP: Basic principle
“ The same information should
be inserted only once “
 As such, we build up a comprehensive
file with all the information required by
all the regulators
 No more need to input twice the same
information
 The information is always available for
every reporting entity
These principles should be applied at all
levels of consolidation
24
Experiences: FINREP
Implementing XBRL for a cross-border banking group in Europe
FINREP: Basic principle
Counterparties
Mapping of the reportings and related ECB comments
25
Experiences: FINREP
Implementing XBRL for a cross-border banking group in Europe
FINREP: Basic principle
Common definitions
e.g. “public sector”
"Non-commercial administrative bodies responsible to central governments, regional governments or local
authorities, or authorities that in the view of the competent authorities exercise the same responsibilities
as regional and local authorities, or non-commercial undertakings owned by central governments that
have explicit guarantee arrangements, and may include self administered bodies governed by law that are
under public supervision".
Art 4 (18) of the CRD.
Used for different reporting in different states like COREP and
FINREP in Luxembourg and Belgium
Like the Equity instruments Including statistical impairment in
FINREP but not in COREP, currently too much discrepancies and
different definitions. Need for harmonization.
26
Experiences: FINREP
Implementing XBRL for a cross-border banking group in Europe
Example
Links with FINREP (and F/S)
27
Experiences: FINREP
Implementing XBRL for a cross-border banking group in Europe
Example
 Links with F/S (and FINREP), partly provided by RMG
28
Experiences: FINREP
Implementing XBRL for a cross-border banking group in Europe
Example B/S
 CEBS B/S
 CB B/S
29
Experiences: FINREP
Implementing XBRL for a cross-border banking group in Europe
Example B/S
CSSF B/S
30
Experiences: FINREP
Implementing XBRL for a cross-border banking group in Europe
Example B/S
CBFA B/S
31
Experiences: FINREP
Implementing XBRL for a cross-border banking group in Europe
Example B/S
 link from F/S to FINREP
32
Experiences: FINREP
Implementing XBRL for a cross-border banking group in Europe
Example B/S
DEXIA’S B/S : link with magnitude accounts
33
Experiences: FINREP
Implementing XBRL for a cross-border banking group in Europe
Example B/S
Example 2: additional detail
34
Experiences: FINREP
Implementing XBRL for a cross-border banking group in Europe
Comments on the discussion paper
Discussion paper “Financial Statements Presentation”
Not very suitable for the banking industry, like most of the IFRS, very oriented
towards industrial companies.
Should be more oriented towards a multi-tier service instead of only investor
oriented.
Very positive to impose a rigid classification as it improves comparability but this
classification should reflect the realities of the different industries.
We do not support presenting cash flows for the banking industry as it won’t add
any value.
We do believe that the use of a global standard like XBRL could reflect the specificities
of our industry and furthermore increase comparability between and inside the different
industries.
We believe that the use of extensions and dimensions in XBRL will provide both the
structure and the flexibility asked by the stakeholders.
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Experiences: FINREP
Implementing XBRL for a cross-border banking group in Europe
FINREP Challenges
Link with IFRS and banks’ financial statements
National discretions:
– CEBS guidelines not always clear
– CEBS guidelines not always respected by member states
– Changes in the “business format” may have insidious impact on the taxonomy (deleting
a line changes the definition of the total – unless “among which”)
– Additional information inconsistent with the CEBS format
– Sometimes, regulators may give interpretations to IFRS rules
Dimensions:
– Preferred instead of tuples (link with IASCF?)
– More standardization may be a benefit (exhaustive list of flows used throughout FINREP)
– Definitions of some dimensions (counterparties => links with COREP, ECB, etc.)
36
Experiences: FINREP
Implementing XBRL for a cross-border banking group in Europe
The Future: Using Dimensions ?
As per our chart of accounts, clearly related
37
Agenda
Implementing XBRL for a cross-border banking group in Europe
IFRS Taxonomy
Introduction
What does XBRL mean for Dexia?
Experiences
COmon REPorting
FINancial REPorting
IFRS Taxonomy
Conclusion
38
IFRS Taxonomy
Implementing XBRL for a cross-border banking group in Europe
Main Structure of the IFRS taxonomy
The Taxonomy is following rule by rule the IFRS requirements
Ease to find an item and the related disclosures
No problem to find out relative examples or description rules
Clear follow up of the updates of the regulation. No difficulties to highlights impacts
of IFRS changes
39
IFRS Taxonomy
Implementing XBRL for a cross-border banking group in Europe
IT viewpoint of the XBRL taxonomy
40
IFRS Taxonomy
Implementing XBRL for a cross-border banking group in Europe
Table Presentation of the taxonomy
41
IFRS taxonomy
Implementing XBRL for a cross-border banking group in Europe
Summary of the main comments relating to IFRS taxonomy
The issue of versioning has been raised by number of respondents
Proposition to add formal descriptions of the concepts in order to avoid misunderstandings or
divergent interpretations.
Propositions to add extensions relating only to some industries or to propose different taxonomies for the
different industries.
Proposition to extend examples to all the possible situations, could be through dimensions, to allow other
examples than the ones proposed by the IFRS wording. (Not all the reporting companies
have biological assets…)
Need to follow more the detail level required by the standards and the common practice.
Need to translate the choices left to the reporting entities in the taxonomy (example: either in the notes
or in the PFS)
The use of the concept of “dimension” could help structure the information provided facilitating even more
the understanding and the use of the provided information.
42
Agenda
Implementing XBRL for a cross-border banking group in Europe
Conclusion
Introduction
What does XBRL mean for Dexia?
Experiences
COmon REPorting
FINancial REPorting
IFRS Taxonomy
Conclusion
43
IFRS Taxonomy
Implementing XBRL for a cross-border banking group in Europe
How does it work ?
Data sources
Accounting
XBRL tool
MAPPING
Risk
xls VALIDATION
Tax
Others
44
XBRL conversion
Experiences : COREP
Implementing XBRL for a cross-border banking group in Europe
Feedback
On the softwares (XBRL focused) :
Flexible enough to be adapted to all taxonomies
To be adapted on a international banking IT structure
Mapping is still the key
Additional taxonomies can be quickly added
On the taxonomies :
Advantages of XBRL aren’t used
Basis taxonomies are modified by local regulators
A unique EU taxonomy is necessary
XBRL is not mature enough to be internally used
45
Conclusion
Implementing XBRL for a cross-border banking group in Europe
Launch of the XBRL reporting
Detail of problems faced by a transnational bank implementing XBRL
Different systems
People are reluctant to change
Information retention instead of global info sharing (protectionism attitude
due, partly, to the crisis)
Risk of national protectionism from the different branches
Risk of additional national requirements => no additional requirements should be
accepted, the member states should be ready to accept “as is” taxonomy as it is
perfectly in line with IFRS requirements (and those should be accepted anywhere)
46
Experiences: FINREP
Implementing XBRL for a cross-border banking group in Europe
47
Conclusion
Implementing XBRL for a cross-border banking group in Europe
It’s just started but already running…
Taxonomies need to be managed in an harmonized way i.e.
Development of extensions has to be consistent with the “parent taxonomy”
Need for Best Practices
But
XBRL standards are now strong enough to be industrialized
More and more authorities are adopting XBRL, it is becoming the standard
XBRL offers a great opportunity to complete the work done by the IASB and the IFRIC
on IFRS principles, as now XBRL may help to better compare information coming from
different companies
Furthermore, the use of XBRL does not require huge investments as most of the
software are open-source
48
Implementing XBRL for a cross-border banking group in Europe
Questions ?
THANKS FOR YOUR ATTENTION
Contacts
Giancarlo Pellizzari
Head of Prudential Policy
+32 22 13 50 49
giancarlo.pellizzari@dexia.com
49
Implementing XBRL for a cross-border banking group
in Europe
Giancarlo Pellizzari
Head of Prudential Policy
Dexia Group
Paris, June 22nd to 25th, 2009