The deadline for AnaCredit compliance is approaching fast as the first complete AnaCredit reporting date is the 30th of September 2018. So, what exactly is AnaCredit and what challenges come with it? And more importantly, is there a solution for those challenges?
AnaCredit stands for analytical credit datasets. It is a project launched in 2011 by the ECB to set up a dataset containing granular credit and credit risk data about the credit exposure of credit institutions and other loan-providing financial firms within the Eurozone. The regulation affects not only credit institutions located in the euro area that are not branches of other credit institutions, but also foreign branches of euro area credit institutions, including non-euro area branches, and foreign branches that are located in the euro area but are part of a credit institution resident outside the euro area.
Anacredit will require over 100 data points to be reported for each exposure in the scope. Those data points cover many aspects of the exposure, including data related to the counterparty (e.g. LEI code, address, number of employees, balance sheet total, etc.), data related to instrument (e.g. type of instruments, currency, non-performing status, interest rate type, payment frequency, etc.), data related to the collateral or other mitigation techniques (e.g. type of protection, real estate collateral location, original protection value, etc.) or accounting data (e.g. accumulated impairment amount, source of encumbrance, status of forbearance and renegotiation, etc.).
The regulation comes with three major challenges. The first, and the biggest, one is the collection of data. The data that is required to be reported is spread away in different data sources which vary from plain excel sheet to PDF loan contracts. The second challenge is the aggregation of the collected data in such a way that reconciliation and auditing become less time-consuming. The third challenge is to create processes so that new information can be reported on a monthly basis to the regulator in a less time consuming and error-prone prone way.
So how can Risksols help with these challenges? With a fully automated solution where all the templates are populated from a single database, which collects data from different data sources but acts as a single source for aggregation as well as analysis of data. It makes reconciliation as well as audit trail much less time consuming as well as less error-prone. Besides that, Risksols will help with the creation of processes that will feed into the database resulting in smooth monthly reporting to the regulator. Add maintenance and support, and you end up with a fully automated system making your life a lot easier.