1 Diretoria de Fiscalização Departamento de Supervisão Indireta The Central Bank of Brazil’s New Credit Information System (SCR) World Bank Finance Forum /September/2004

2 Project Initiation Background Regulation Better assessment of financial institutions’ economic capital Supervisory Function Information Improved availability of credit risk data for market participants “Credit Bureau”Function Dramatic increase in demand for credit Information (internal & external) Need to Adapt to new Basel requirements Policy drive to reduce intermediation spreads & improve access to finance

3 Technical Factsheet Number of Financial Institutions Participating1,400 Types of Files Sent4 Number of Quality Control Checksmore than 300 Database Size Number of Files1 trillion Projected Database Size (in 14 months)300Gb Number of Menus (screens)800 Number of Lines of Software Code120,000 Number of Business Rules500 Number of Alternative Flows400

4 System Architecture Data input Data Warehouse (DW) Doc3082 Sistema SCR BD Operational Data input Outros Unicad SRF Documents entered into the system : Doc 3030 Doc 3020 Doc 3026 BD Control Report Quality Control Procedures Institutions Central Bank

5 Summary of all operations, including those reported in detail in Form 3020 Aggregated by: Type of operation Risk rating of the operation Value of the operation Type of client Reported in aggregate: Distribution of maturities Number of operations Number of clients Provisioning levels Localização Origem dos recursos Vinculação à Moeda Estrangeira etc Form 3030 – Aggregate Data

6 Form 3020 – Individual Data Consolidated Operations (loans below R$ 5,000) Type of operation Risk classification Exchange rate variation Number of operations Distribution of maturities etc. Individual Operations (loans equal or greater to R$ 5,000 = US$ 1,720) Contract number Type of operation Origen of funds lent Indexed interest rate Annual effective interest rate Risk classification CEP (zip code) Date loan was initiated Date of maturity Guarantees (all) Guarantors (all) Distribution of maturities Etc.

7 Clients requested by the Central Bank Balance Sheet Data Data from Ratings Agencies Cadastral Information is requested for all companies belonging to the same group as perceived by lenders, regardless of whether they are all clients of that financial institution. The information provided by individual financial institutions is then consolidated by the supervisors to map the group structure and assess its risk profile. Form 3026 – Complementary Data Relevant Clients (Operations in excess of R$ 5 million (US$ 1.72 million) Corporate Group / Holding Structure Identification Principles

8 Feedback to Financial Institutions AÑAAA...ÑA 100,000clients 30,000authorizations ,000 clients with consolidated information 3020 Option 1: Web access for individual queries Option 2: Consolidated information at portfolio level

9 Example of Data Display (1)

10 Example of Data Display (2)

11 Example of Data Display (3)

12 Examples of Use of SCR Data in Banking Supervision Transition Matrix Profiles of Credit Portfolios Analysis of Borrowers Systemic Oversight of Credit Market Credit Analysis by institution or in aggregate (economic sector, geographic distribution of credit, distribution by value, etc) Stress Testing

13 Example of Transition Matrix