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Rome, May 6th 2014
Eugenio VirgutiEugenio VirgutiXBRL Italia Partner of SOVEGA IT Systems
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Agenda
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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
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.
CONFIDI’s – What They Are and How They Work
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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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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
Current Issues
An XBRL-driven Exchange of Information
Confidi Data BaseBanks Confidi’s
Value Added Service Providersie. Galileo, SEC, OASI, HP EDS, Aubay ELSAG, CABEL, TREND
Engineering, others
Direct Data Management or Through Independent Third
Parties
Shared investments and higher efficiency
to achieve critical mass of guarantees
volumes
Higher independence of service providers
Certification of Reference Data
Model
Automated Data Flows (no manual activities and no
misinterpretations)
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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.)
An XBRL-driven Exchange of Information
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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 Model 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.
Stakeholders Involved
1. XBRL ITALY2. Italian Confidi Associations3. Promoting Confidi Associations4. Confidis5. Italian Banking Association (ABI)6. Banks7. Bank of Italy8. Partner Universities9. Software Partners
• Infrastructure• Value Added Services
10.Advising Partners• Legal/Regulatory• Organisation
11.Others
Rome, May 6th 2014
Eugenio VirgutiEugenio VirgutiXBRL ItaliaPartner of SOVEGA IT Systems
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