Secrétariat général de la Commission bancaire COREP - FINREP - XBRL The French Banking Commission approach VII European Banking Supervisors XBRL Workshop Munich, 09-10 may 2007 Sylviane DELARUE Jerome POUPARD COFINREP Project SGCB COREP - FINREP - XBRL

COREP- FINREP- XBRL The French Banking Commission approach 1 • Project objectives : a european framework 2 • Consequences on our IT system 3 • Challenge : managing complex taxonomies 4 • The French Banking Commission COFINREP project 5 • COFINREP : technical choices - XBRL learning curve

1. Project objectives : a european framework The objectives of Committee of European Banking Supervisors : Harmonising banking supervision practices in Europe, and developing a common supervisory culture Reducing unnecessary costs of reporting to the banking supervisors through European convergence In order to fulfill this goal, need for : The definition of a common framework A common vocabulary based on the European legislation A degree of flexibility in order to adapt to national specifics.

1. Project objectives : a european framework Two european initiatives : A common reporting for a common solvency ratio (COREP – COmmon REPorting) CRD Directives 14 June 2006: final adoption of Directives 2006/48/CE et 2006/49/CE COREP 13 January 2006: CEBS publishes COREP templates => http://www.c-ebs.org/standards.htm December 2005/ juin 2006 : Discussion with the banking industry on the French reporting Adoption of the French COREP project by the Banking Commission 26 March 2007

1. Project objectives : a european framework A common « supervisory financial » reporting for banks consolidated accounts in IFRS (FINREP, FINancial REPorting) European regulation introducing IFRS is directly applicable in Europe European reporting published by the CEBS on 16 December 2005 => http://www.c-ebs.org/standards.htm Adoption of the French FINREP project by the Banking Commission on 28 June 2006 1st remittance date for COREP and FINREP 30 June 2007 in France

1. Project objectives : a european framework XBRL taxonomies built by the CEBS for COREP and FINREP are essential in order to create a common framework. They include : A common vocabulary for European supervisors, elaborated on the basis of official European regulations and A common « grammar » through its « Linkbases ». XBRL allows for a european flexible approach, including national specific elements But XBRL standard must also keep pace with the evolution of business requirements, and the complexity of COREP and FINREP reportings.

2 • Consequences on our IT system The French Banking Commission decided to make it mandatory for the banks to transmit their COREP and FINREP reports, using the XBRL standard for reasons of efficiency and cost. The working relation between banks and the BC will change only marginally : The General Secretary of the Banking Commission has provided the banks with the adapted French version of the European taxonomies The financial institutions will transmit their reports (instance documents according to XBRL vocabulary) XML/XBRL, via the usual data transmission means After verification of data quality, anomalies will be restituted to each institution

2 • Consequences on our IT system The Banking Commission decided to go further in the adoption of XBRL/XmL, for the following reasons : First, our present data system, BAFI, is a proprietary one, only used for the exchange of data between the French financial institutions and the Banking Commission/Bank of France BAFI is now a mature system (1993) which was due to evolve in the coming years (very complex legacy in mainframe technology : >1000 programs) Communication with many applications inside and outside and a much parameterised system (single window betwen financial institutions and BOF). XmL has become a standard in data transmission which imposes itself in the banking industry

2 • Consequences on our IT system In a first stage, need to run two parallel information systems : COFINREP and BAFI Possible since : Relatively few common data between the new reportings and the present data base COREP and FINREP are new and would have, in any case, needed important and complex developments in the old system This situation will not hinder the supervisors’ work However, we will need to run data exchanges between both systems

2 • Consequences on our IT systems BAFI Financial Institution Information System Accreditation Input Output Civil statuts data Configuration Prudential and accounting Reporting Inside applications CB/BDF Bâle II SIGNECB COREP Instances Data Control and management IFRS Data mining FINREP Instances XBRL Taxonomy management Accreditation COFINREP

2 • Consequences on our IT system The second stage (after COFINREP) : we intend to move on with the rest of the reporting system and to have a single data exchange system with the financial institutions. In order to achieve this, we will have to : Create taxonomies regrouping all necessary data for supervisors Add the necessary functionnalities to the new system Do the same thing with the other data managed by BAFI (statistics data, monetary data….).

3 • Challenge : managing complex taxonomies Banking Commission decided to create and manage in-house the French versions of COREP and FINREP taxonomies COREP: about 800 entities concerned FINREP: about 80 entities concerned Final users : 280 supervisors and inspectors Team of 3 taxonomy managers (and 2 experts)

3 • Challenge : managing complex taxonomies French version of COREP project considered too complex and too detailed 30 templates 70.000 data 19 templates 14000 data with 1100 data with a possible postponement  8300 data asked in standard approach and 6000 in IRBA approach

3 • Challenge : managing complex taxonomies French version of FINREP The CP06, published in april 2005, considered too complex and too détailed The final version of CEBS (12/2005) took care of these criticisms The french version (06/2006) reduce even more the reporting 39 templates(CEBS) 2.400 data 29 templates (France) 1.500 data with 400 data (9 templates) yearly 1100 data (20 templates) half yearly

3 • Challenge : managing complex taxonomies Creation of the French versions on the basis of the European taxonomies All the labels of concepts coming from the European taxonomies translated into French Creation of a limited number of French specific concepts (with an English and French label) Internal validation of the taxonomies with the help of our tools (formalism and standards) and our supplier

3 • Challenge : managing complex taxonomies European taxonomies were available at the end of september for FINREP and on the 6th of october for COREP: French versions : FINREP => version for discussion (0.1) published on the Banque de France website on 26 october 2006 - version 0.2 15 january 2007 - approved version 1.0 : 5 february 2007 http://inbdf/fr/supervi/supervi_banc/reporting/finrep.htm COREP => version for discussion (0.1) published on 1st december 2006 http://inbdf/fr/supervi/supervi_banc/reporting/corep.htm

3 • Challenge : managing complex taxonomies French taxonomy definitions Professional’s Feed back Validated taxonomies Launch T A X O N M Y Taxonomy editing tool delivery, getting started and training Taxonomy extensions Taxonomy finalization Project management and supervision 02/2007 First draft European taxonomies 01/2006 Final version european Taxonomies & Beginning of French taxonomies 09/2006 Taxonomies available for the professional public 10/2006

4. The Banking Commission COFINREP project SCOPE French taxonomies management (VERSIONING) Data reception management Electronic signature of the instance documents Authorisations and reference data management Controls of received instances Reminders in case of anomalies or late data transmission Synthesis and reporting according to the needs of the supervisors Interface with the others systems of BDF Automatisation of the processes P O R T A L V 1 La directive européenne = référence commune tendance > séparation des orientations comptables et prudentielles FINREP conduit par la Belgique Dans cad III 3thématiques sont abordées : risques de marché, risque de crédit, risque opérationnel, même standardisation au niveau international l ’ensemble des EC sera impacté Les superviseurs travaillent sur des normes de calcul et plus de cohérence entre normes comptables et prudentielles, Conception de 25 tableaux déclinés en 170 combinaisons différentes Le nombre de docts existant dans BAFI sera multiplié par 2 suite à CAD III Il sera pris en compte pour 1 établissement du fait qu ’il dispose d ’outils + / - fins pour la prise en compte de sa politique de risque P O R T A L V 2

4. The Banking Commission COFINREP project Go live Portal V1 Go live Portal V2 Launch Validation Global conception P O R T A L Portal V.1 La directive européenne = référence commune tendance > séparation des orientations comptables et prudentielles FINREP conduit par la Belgique Dans cad III 3thématiques sont abordées : risques de marché, risque de crédit, risque opérationnel, même standardisation au niveau international l ’ensemble des EC sera impacté Les superviseurs travaillent sur des normes de calcul et plus de cohérence entre normes comptables et prudentielles, Conception de 25 tableaux déclinés en 170 combinaisons différentes Le nombre de docts existant dans BAFI sera multiplié par 2 suite à CAD III Il sera pris en compte pour 1 établissement du fait qu ’il dispose d ’outils + / - fins pour la prise en compte de sa politique de risque Portal V.2 06/2006 07/2006 06/2007 01/2008 Project management and supervision

4. The Banking Commission COFINREP project Choice of a generic software : very short deadlines use XBRL as far as possible Legal process for open tender : Open tender : 7 december 2005 Emission of specifications : 3 february 2006 Choice of solution : may 2006 Chosen software meets 50% of users’ requirements in the basic version 50% of specific developments taken in charge by the supplier Supplier team (5 to 10 people), internal IT team (4 to 6)

5 • COFINREP : technical choices - XBRL learning curve Main challenges : Dealing with very complex taxonomies, using dimensions extensively (new standard 1.0 created COREP) Lack of maturity of existing softwares, in particular taxonomy editors, not always compatible Training offer is still very limited Lack of formulae standard, which makes it compulsory to develop in-house business rules The question of “versioning” management is urgent and should be a priority for the months ahead

5 • COFINREP : technical choices - XBRL learning curve The added XML header: why? Electronic signature <fichier> < enveloppe> <XBRL> + To be able to sign multiple instances + So that habilitation testing are not XBRL dependent + For better « on the fly » performance on instance reception Added consistency tests Note: the XML schema of the header is available at: http://www.banque-france.fr/fr/supervi/supervi_banc/reporting/reporting.htm

5 • COFINREP : technical choices - XBRL learning curve The workflow of an instance Definition: an instance in COFINREP, is an XBRL instance limited to a single entity, a single taxonomy, single date and single money (iso421U7). Definition: The private taxonomy is an extension of our public taxonomy with added controls non compatible with all the existing tools, thus they cannot be shared. These « added » controls are described in the Excel files on the BDF website.

5 • COFINREP : technical choices - XBRL learning curve The workflow of an instance During the day: 1. Reception of files 2. If signed, control of the signature and rights to sign 3. Control of the header format (control that all the data is declared production OR simulation in a same file). Implicit XML well-formedness check. 4. Check of the identity of the sender

5 • COFINREP : technical choices - XBRL learning curve The workflow of an instance During the night, for every file that passed control 3 during the day: 1. The files are broke down into XBRL instances with a xml header 2. we take the latest file for each key (entity, date, taxonomy) 3. Full validation of instance (public taxonomy) and added controls 4. If no errors, validation with private taxonomy. 5. The instance will then be used for: extraction to other application, transverse reports 6. report to the financial agents on the status of the instances sent

5 • COFINREP : technical choices - XBRL learning curve Focus on: Control and storage of an instance # Contrôle Process stop Production Simulation 1 In case of a COREP instance, check that the value of the option in the header is properly set to « consolidated » or « social » yes X 2 XBRL 2.1 3 Aggregations and dimensions 4 Calculation links no 5 Uniqueness of key (entity, date, taxonomy) in instance 6 Coherence of entity between header and instance Existence of entity in database Manual verification 7 Coherence of date between header and instance   Existence of date in database 8 Coherence of taxonomy between header value and instane’s schemaref Validity of the taxonomy and the reported date 9 Coherence of currency between header value and instance declaration (iso4217 only) Validity of currency for the entity (database). 10 Is type COREP or FINREP expected for entity COREP only: is entity authorized for the option declared in the header (consolidated, social) COREP only: is entity authorized for the approach value in the header, and the values present in the instance. (standard, foundation, advanced). COREP only: is the date of the reporting in the instance coherent with the entity’s status - Mars, June, September and December for large groups - June and December only for small groups

Corporate Directory Server: BAFI … Reference data management 5 • COFINREP : technical choices - XBRL learning curve BACKEND Financials institutions (submitters) INTRANET EXTRANET - Taxonomy creation - Instance management - Taxonomy published - Intances workflow Instance Document Instance Document Instance Document Instance Document Receipt Management Taxonomy Taxonomies Reception Management Instance Document Instance Document Databases servers Taxonomy management Reporting synthesis Conception Reporting calculation Control and storage Amounts ctrl. BAFI/COFINREP Comparision Taxonomy control Taxonomy Taxonomy Mistakes/Errors Corporate Directory Server: BAFI … Habilitations Reporting Extraction COFINREPReporting Errors Reporting synthesis Reference data management

5 • COFINREP : technical choices - XBRL learning curve The test platform: a compatibility check The platform opened up in the beginning of March. Within one month we received 4 instances Instances were mostly FINREP Result : 3 instances: 100% public taxonomy valid. The last instance failed taxonomy validation, but was successful on the second emission 3 out of 4 had no CL error, but only one succeeded the private taxonomy tests.

5 • COFINREP : technical choices - XBRL learning curve B. The performance test Done with over 800 instances. Instances with every fact combination filed. Not a “real life” scenario. Difficulty encountered: evaluate the target performance.

5 • COFINREP : technical choices - XBRL learning curve

5 • COFINREP : technical choices - XBRL learning curve Virtual memory usage (On Java batches) In a possible future: switching from java 32 bits to java 64 bits (over 4G jvm).

5 • COFINREP : technical choices - XBRL learning curve Time consuming factors: Number of facts in the instance Typed dimensions Explicit dimension with many domain-members

5 • COFINREP : technical choices - XBRL learning curve C. Questions to answer before building your IT Precision and decimals (9453 decimal= -3 )+ (9454 decimal= -3) + (9453 decimal= -3) = 27 023 decimal=-3 We imposed decimal=0 for monetary Items and decimal=4 for pures Need for a tolerated variation in CL, more precise than the use of decimals (needed: +- 3000) Units and scale Although most existing system work with Kilo-Euros in the BDF, money scale is not part of the XBRL. We work with Euros, but will have to convert when exporting data to other existing application.

5 • COFINREP : technical choices - XBRL learning curve Missing/duplicate facts Missing facts can make certain Calculation Links to no be check (especially with total) Duplicated facts will interfere with calculation links, and possibly any control or restitution framework This is why, it was decided that missing or duplicate fact were to be detected by COFINREP. The financial agents will be warned of these problems, and will be asked to correct this. Instance’s size impact Long item names, namespace ids, unit ids, dimension name…. increase size of instances Increase processing time of an instance For example: replacing all ids/names in an instance by numbers => more than 60% size gain

5 • COFINREP : technical choices - XBRL learning curve Added control framwork The need of: inter-instance controls controls with other data source (data bases, flat file…) conditional or complex controls Periodic controls (A test only done a particular month or frequency) Might require to build some configurable control mechanisms. Automated restitution: functional/technical barrier on data errors Not everyone understands fact names, contexts, dimensions and hypercubes. We need to translate, for example, a Calculation error in way that an accounting personnel will easily understand.

5 • COFINREP : technical choices - XBRL learning curve XBRL instances and XML mapping tools The problem encounter with some XML mapping tools and XBRL instances is often due to the declaration of item: XBRL instance: Easier mapping format: Xsl transformation of XBRL instances is in study

5 • COFINREP : technical choices - XBRL learning curve D. Xades signature and XBRL First test with Xades signature and XBRL instances were conclusive Found an incompatibility between XBRL and the c14n, exclusive version, not standard, algorithm. It does not keep silent namespaces. The final technical note will soon be available on the Banque de France website In the upcoming weeks, the digital signature will be added to our test platform.

5 • COFINREP : technical choices - XBRL learning curve E. In a nearby future: We are trying to extend the use of XBRL in other applications: communication purpose data processing purpose Also we follow the interest that major software companies have in XBRL: Oracle, Microsoft, Altova, Fermat… Ultimately , we communicate with the profession in hope that they will take the XBRL step, not just the export mapping/converter choice!

Secrétariat général de la Commission bancaire QUESTIONS ? SGCB