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Eugenio Virguti
XBRL Italia
Partner of SOVEGA IT Systems
Rome, May 6 th 2014

Agenda
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CONFIDI’s – What They Are and How They Work
 618 Confidis operating on the Italian territory as at last December
 60 Confidis (approx 10%) are supervised by the Bank of Italy
( Supervised Confidi’s ) and account for 73% of all guarantee volumes
 Since the introduction of Basel II, strong industry restructuring , including mergers and acquisition, to put up with growing competition, lower margins and increasing capital requirements for banks, which in turn require better quality of guarantees issued
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CONFIDI’s – What They Are and How They Work
SME’s participate in
Confidis by paying annual subscription fees
Confidis and Banks sign an agreement which covers all loans guaranteed by Confidis. The agreement defines terms and conditions.

Current issues
…however….
 assessment of borrowing firms is only carried out by the lending bank , with no proprietary evaluation on the part of Confidis

Confidis rely on banks ’ creditworthiness evaluation and they only look for counter guarantee mechanisms (albeit partial and/or subject to specific conditions)
 Confidis not informed on the firm’s risk dynamics unless the firm defaults and the bank calls on the guarantee
Need to improve the guarantee-issuing assessment process and implement units to measure and manage profitability and credit risks
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Current Issues

Need of co-operation between banks and Confidis
 Use of IT systems to promptly identify early warning signs of distress (no relying on lenders ’ information)

More focus on internal controls (as required by Bank of Italy regulations)
Holistic approach to define flow of information between banks and Confidis
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An XBRL-driven Exchange of Information
Shared investments and higher efficiency to achieve critical mass of guarantees volumes
Banks
Direct Data Management or
Through Independent Third
Parties
Confidi
Data Base
Certification of
Reference Data
Model
Confidi’s
Automated Data
Flows (no manual activities and no misinterpretations)
Value Added Service Providers ie. Galileo, SEC, OASI, HP EDS,
Aubay ELSAG, CABEL, TREND
Engineering, others
Higher independence of service providers

An XBRL-driven Exchange of Information
1.
Define a unique data model ( semantic data model ) complying with Confidis information needs in order to: a.
Meet risk management and monitoring needs b.
Meet supervisory reporting requirements
2.
Implement a project to define the means, the tools, the business units, the competencies, resources and structures required to develop a consolidated
Banks-Confidis database that enables uploading, updating and maintenance of loan-related information
3.
Participation of all stakeholders involved (Confidis Associations, banking system, single Confidis, IT and regulatory reporting service providers, Bank of
Italy, legal/operations consultants, etc.)
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XBRL Confidi Project – Major Steps
The project is comprised of two phases:
1. a regulatory reporting phase, where banks and Confidis agree on a common reporting format and exchange data for the purposes of more accurately complying with regulatory reporting requirements
2. a risk management phase, where data exchange between banks and
Confidis are XBRL-aggregated for better credit risk assessment
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XBRL Confidi Project – Major Steps
1.
Definition of Data Point Mode l to meet Confidi’s needs in terms of risk management and regulatory reporting requirements
2.
Primary information required (definition of XBRL information hierarchies)
• Master Data of Borrowing Firms
• Loans received by single bank
• Loan status (active, distressed, etc.)
• Amortization Schedules
3.
Return information to banks
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XBRL Confidi Project – Major Steps
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XBRL Confidi Project – Major Steps
Draft taxonomies have already been produced in February and instance creation is currently under way. First phase should be completed by the end of June 2014.
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Stakeholders Involved
1.
XBRL ITALY
2.
Italian Confidi Associations
3.
Promoting Confidi Associations
4.
Confidis
5.
Italian Banking Association (ABI)
6.
Banks
7.
Bank of Italy
8.
Partner Universities
9.
Software Partners
• Infrastructure
•
Value Added Services
10.
Advising Partners
• Legal/Regulatory
• Organisation
11.
Others

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Eugenio Virguti
XBRL Italia
Partner of SOVEGA IT Systems
Rome, May 6 th 2014