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XBRL to improve credit risk management in ITALIAN Credit Guarantee Consortia ( Confidi ). Eugenio Virguti XBRL Italia Partner of SOVEGA IT Systems. Agenda. Confidi: What They Are and How They Work. Current Issues. An XBRL-driven Exchange of Information.

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eugenio virguti xbrl italia partner of sovega it systems

XBRL to improve credit risk management in ITALIAN Credit Guarantee Consortia (Confidi)

Eugenio Virguti

XBRL Italia

Partner of SOVEGA IT Systems

1

agenda
Agenda

Confidi: WhatThey Are and How They Work

CurrentIssues

An XBRL-driven Exchange of Information

The XBRL Confidi Project – Major Steps

Stakeholders Involved

confidi s what they are and how they work
CONFIDI’s – What They Are and How They Work
  • 618 Confidisoperating on the Italianterritoryasat last December
  • 60 Confidis(approx 10%) are supervised by the Bank of Italy (SupervisedConfidi’s) and account for 73% of allguaranteevolumes
  • Since the introduction of Basel II, strong industryrestructuring, includingmergers and acquisition, to put up with growingcompetition, lowermargins and increasing capital requirements for banks, which in turn requirebetterquality of guaranteesissued
confidi s what they are and how they work1
CONFIDI’s – What They Are and How They Work

Bankslendmoney to SME’s

Confidi guaranteesrepayment of loan in whole or in part

SME’sparticipate in Confidis by payingannualsubscriptionfees

Confidis and Bankssign an agreementwhichcoversallloansguaranteed by Confidis. The agreementdefinesterms and conditions.

current issues
Current issues

…however….

  • assessment of borrowingfirmsisonlycarried out by the lendingbank, with no proprietaryevaluation on the part of Confidis
  • Confidisrely on banks’ creditworthinessevaluationand theyonly look for counterguaranteemechanisms (albeitpartial and/or subject to specificconditions)
  • Confidisnotinformedon the firm’sriskdynamicsunless the firmdefaults and the bankcalls on the guarantee

Need to improve the guarantee-issuing assessment process and implement units to measure and manage profitability and credit risks

current issues1
Current Issues
  • Need of co-operationbetweenbanks and Confidis
  • Use of IT systems to promptlyidentifyearlywarningsigns of distress(no relying on lenders’ information)
  • More focus on internalcontrols(asrequired by Bank of Italyregulations)

Holisticapproach to define flow of information betweenbanks and Confidis

an xbrl driven exchange of information
An XBRL-driven Exchange of Information

Sharedinvestments and higherefficiency to achievecritical mass of guaranteesvolumes

Certification of Reference Data Model

Direct Data Management or Through Independent Third Parties

Confidi

Data Base

Confidi’s

Banks

Automated Data Flows (no manualactivities and no misinterpretations)

Higherindependence of service providers

Value Added Service Providers

ie. Galileo, SEC, OASI, HP EDS, Aubay ELSAG, CABEL, TREND Engineering, others

an xbrl driven exchange of information1
An XBRL-driven Exchange of Information
  • Define a unique data model (semantic data model) complying with Confidis information needs in order to:
    • Meetrisk management and monitoringneeds
    • Meetsupervisory reporting requirements
  • Implement a projectto define the means, the tools, the business units, the competencies, resources and structuresrequired to develop a consolidatedBanks-Confidis database thatenablesuploading, updating and maintenance of loan-related information
  • Participation of allstakeholdersinvolved (ConfidisAssociations, banking system, single Confidis, IT and regulatory reporting service providers, Bank of Italy, legal/operationsconsultants, etc.)
xbrl confidi project major steps
XBRL Confidi Project – Major Steps

The projectiscomprised of twophases:

  • aregulatory reporting phase, wherebanks and Confidisagree on a common reporting format and exchange data for the purposes of more accuratelycomplying with regulatory reporting requirements
  • arisk management phase, where data exchangebetweenbanks and Confidis are XBRL-aggregated for better credit riskassessment
xbrl confidi project major steps1
XBRL Confidi Project – Major Steps
  • Definition of Data Point Model to meetConfidi’sneeds in terms of risk management and regulatory reporting requirements
  • Primary information required (definition of XBRL information hierarchies)
    • Master Data of BorrowingFirms
    • Loansreceived by single bank
    • Loan status (active, distressed, etc.)
    • AmortizationSchedules
  • Return information to banks
xbrl confidi project major steps2
XBRL Confidi Project – Major Steps

Data set name

XBRL data hierarchies

XBRL ConceptAttributes

xbrl confidi project major steps3
XBRL Confidi Project – Major Steps

Drafttaxonomieshavealreadybeenproduced in February and instancecreationiscurrently under way. First phaseshould be completed by the end of June 2014.

stakeholders involved
Stakeholders Involved
  • XBRL ITALY
  • Italian Confidi Associations
  • Promoting Confidi Associations
  • Confidis
  • Italian Banking Association (ABI)
  • Banks
  • Bank of Italy
  • Partner Universities
  • Software Partners
    • Infrastructure
    • Value Added Services
  • AdvisingPartners
    • Legal/Regulatory
    • Organisation
  • Others
eugenio virguti xbrl italia partner of sovega it systems1

Thanks for yourattention!!

Eugenio Virguti

XBRL Italia

Partner of SOVEGA IT Systems

14