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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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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.

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
ad