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19 th XBRL International Conference “Reducing regulatory burden with XBRL: a catalyst for better reporting” June 22-25, 2009 Paris, France. Track 4 Title : How XBRL Facilitates the Electronic Collection of Financial Information for Credit Risk Rating,

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Track 4

19th XBRL International Conference“Reducing regulatory burden with XBRL: a catalyst for better reporting”June 22-25, 2009Paris, France

Track 4

Title: How XBRL Facilitates the Electronic Collection of Financial Information for Credit Risk Rating,

Name: Igno J. Dekker, Business Architect, ABN AMRO Bank, The Netherlands.

Date: Thursday, June 25. 11.00 – 12.30


Index

Index

  • Flash back

  • Observations

  • Developments in banking sector

  • (Dis)Advantages Banking Taxonomy

  • Agreement Government and banks


Flash back

Flash back

  • Goal SBR NL: reducing administrative burden

    • - by semantic and technical standardization

    • - and ensure the connection between the taxonomy and the law

  • In 2007 the Dutch taxonomy was available: mission completed!

    • - number of data elements dropped from more than 200.000  12.000

    • - in practice the taxonomy was used by professionals for interpreting law

    • and regulations, and accounting practices

    • - advantages of the Dutch taxonomy were and are beyond doubt

    • - there was and is a growing interest in the concept

    • - banks did not participate until October 2007

    • … but…


Observations

Observations

  • “What in it for me?“

  • Organisational problems

  • Is there a political and corporate need?

  • Ultimately, it comes down to moderating the chain


Developments in banking sector

Developments in banking sector

  • Fulfil Basel II requirements

    • 1. Program lending vs. Non-program lending

    • 2. Automated creditscoring based on bankspecific models

  • Increase data quality: standardization and prevent data entry mistakes

    by electronically exchange of annual account information

  • Investigate the possibility of an online, realtime end-to-end credit process

    for program lending products

  • The need to get more credit specific information from the annual account data


Bank extension on dutch taxonomy

Bank extension on Dutch Taxonomy

  • In close cooperation between two banks, two financial intermediaries

  • and the SBR operational office, the data elements for the credit process

  • of Program Lending products are specified and defined

  • Starting point was: the Dutch Taxonomy on tax basis, built in 2007

  • Bank extension means that the data required for the credit process

    are standardized for the credit lines until € 1 mln.


Sbr three interconnected layers

SBR: three interconnected layers


Examples of detail information

Examples of detail information

  • The Dutch Tax Administration is interested in the total amount of fixed assets.

  • The banks are interested in the tax and market value of the individual objects

  • The tax administration needs the total amounts of debtors and creditors.

    The banks are interested in the next specification:

  • Specify number/

  • amount Debtors

  • & Creditors

0 – 30 days

30 – 60 days

60 – 90 days

> 90 days


Advantages business entity

Advantages business entity

  • Data exchange to different parties (Tax Administration, Chamber of Commerce,

  • Statistics Office) from one administration point

  • Taxonomy connected to accounting software. Data can be generated

  • automatically.

  • Apply for credit can be answered online, real-time in the near future

  • Apply for credit via internet channel

Disadvantage

  • Bank extension needs additional data on top of tax administration


Advantages financial intermediary

Advantages financial intermediary

  • No difference between commercial and fiscal annual account

  • Paper output will be replaced by electronical output

  • Validation of in between information means additional work

  • More attention for benchmarking

Disadvantage

  • Decreasing efforts of accountant by standardization


Advantages bank

Advantages Bank

  • One valuation standard

  • One point of data generation

  • No manual data entry

  • Higher frequency of data exchange. Improvement credit control

  • Increasing quality of data and credit risk models

Disadvantage

  • It becomes much easier to apply for more than one quotation


Agreement government and banks

Agreement Government and Banks

  • Major problem:

  • Dutch Taxonomy and bank extension are defined, but

  • how can both parties mobilize/”bootstrap” the market

  • Solution:

  • Joint efforts of Government and banks to stimulate the use of the

  • Dutch taxonomy included the bank extension.

  • Agreement signed on June.9th 2009


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