IReF- The reorganization of the reporting system for banks in the euro area

The Integrated Reporting Framework (IReF) is an initiative of the European Central Bank (ECB) to consolidate and standardize reporting for banks in the eurozone. CURENTIS looks at the current status of the initiative and the banks' view of the change.

Banks are subject to a large number of reporting obligations, the fulfillment of which is associated with high personnel and administrative costs. For example, banks in the Eurosystem must submit various statistical reports to the supervisory authorities, such as the monthly balance sheet statistics (BSI), theMFI interest rate statistics (MIR), the securities holdings statistics (SHS) and the credit data statistics (AnaCredit). In some cases, identical information is reported multiple times by the institutions in these statistical surveys. IRef is intended to be the long-term solution to this problem and will come into force from 2027.

Goal

IReF aims to reduce the statistical reporting burden for banks through the "collect data only once" principle. To this end, the existing reporting obligations are to be merged into a uniform and standardized reporting framework in order to avoid duplicate reporting or discrepancies between the individual reports and country-specific requirements. As a first step, the four main statistical surveys (credit data statistics (AnaCredit), securities holdings statistics (SHS), monthly balance sheet statistics (BSI) and MFI interest rate statistics (MIR)) will be combined in one regulation by combining the reporting obligations on a highly granular basis (individual loan basis, individual securities basis, individual customer basis). In addition, banks no longer have to apply different reporting procedures, as raw data is collected under IReF instead of templates that have to be specified. The European System of Central Banks (ESCB) is also aiming to standardize this regulation across countries, whereby necessary national reporting obligations are also to be taken into account.

Advantages

The Integrated Reporting Framework is primarily intended to reduce the workload for banks and thus lead to cost savings and increased efficiency. Existing hurdles in the reporting system, such as double reporting and discrepancies between different reports, are to be removed by the Integrated Reporting Framework. In addition to the banks, the addressees can also benefit from the new regulation: For example, a major advantage of standardized data across countries is better comparability between banks.

Schedule

The IReF project is currently in the "Investigation Phase", in which, among other things, the legal and operational framework conditions are being coordinated and a standardized reporting scheme (IReF collection layer) and an extended reporting scheme (extended technical layer) for national requirements are being developed. The IReF is not expected to enter into force before 2027.

Cost-benefit analysis

Due to the complexity of the envisaged IReF and its possible content, the authorities involved are in constant communication with the banking sector and other relevant stakeholders. Part of this continuous exchange includes cost-benefit analyses (CBA). For example, an initial CBA was carried out in November 2020 to assess the potential impact of the IREF together with the banks. A supplementary cost-benefit analysis (cCBA) from November 2023 has provided clarity on the potential advantages and disadvantages of the aforementioned framework through the broad participation of banks throughout the EU. The cCBA, the results of which were published in April 2024, was attended by 287 institutions and examined in particular the expansion of the IReF to include country-specific reporting requirements, an approximation to FINREP solo and additional analytical and operational aspects.

Results

The most important finding of the cost-benefit analysis is the positive response to a centralized and standardized reporting obligation. Among other things, it showed that the majority of participating banks are not opposed to granular data collection, as this can simplify the reporting process. Country-specific reporting requirements, on the other hand, are viewed critically by most banks, as they often lead to considerable additional work. Close coordination between IReF and FINREP data is also seen as advantageous by many respondents, as this enables more efficient and effective reporting, even if there are critical voices regarding the complexity and costs of such coordination. The latter call for a proportional approach in order to minimize the costs and challenges of such a reconciliation. Another sensitive point of the cCBA is the reporting of granular information on real estate loans. There are already different national approaches to reporting real estate loans, including macroprudential indicators. Although the IReF could introduce a standardized implementation here, the majority of the banks surveyed consider the benefits to be too low compared to the high costs.

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