Setting priorities in a jungle of reporting requirements

News
Date 17 December 2012

Prudential reporting by banks needs improvement. Easier said than done, given the complexity and multitude of requirements.

Seminar

DNB has examined the reliability of liquidity and solvency reporting by nine banks and concluded that none of these does everything right in all respects, and also that some problems/errors recurred at several of the banks. The outcomes of this examination and possible ways to improve the reports were the subject of a special DNB seminar held on "12-12-12" with representatives of the three protagonists in prudential supervision: banks, auditors and supervisors. They agreed unanimously that the reports need to be improved. Equally unanimously, they concluded that this is going to be no easy task. 
 
Problem areas
Jos Heuvelman, director of DNB's banking supervision division, opened the seminar. Next, DNB's examination results were presented. Some examples of (anonymized) reports were used to illustrate and identify several areas for improvement. 
Several practical problem areas were found to exist. 'We can probably deliver exactly what you want, but sometimes we are in doubt about the exact meaning of exactly your requirements and preferences,' Waldo Halfhuid of NIBC, responsible for prudential policies, told DNB. In his opinion, bankers are able to build a new reporting system that meets all requirements. This will, however, require extra efforts and manpower.Auditor Dick Korf (KPMG) discussed his findings and recommendations for the three parties involved.

He told the meeting he believed banks could gain by aligning their prudential reporting more closely with their own internal reporting systems and by giving prudential reporting greater prominence within their own policy cycle. Auditors, in their turn, might take a less fragmentary approach to their work and be more innovative. He recommended that supervisors should be more open to comments, should make priorities in what they demand from banks and should provide clear guidance.
 
Discussion
DNB also had recommendations to make: prioritize – i.e. assign less weight to less important requirements – and take a more pragmatic attitude to reporting. These remarks set off a lively discussion. Hans Buurmans (ING/NVB), for one, argued that many bankers face an accumulation of regulatory requirements which they find it impossible to accommodate overnight. Supervisors AFM and DNB countered that this is due to European legislation which all banks have to comply with. There is no choice: what must be, must be.
 
In years to come, DNB will continue to devote much effort to the quality of reporting. With better reports, banks will be better able to compare themselves to their peers while the supervisor is able to make better-founded decisions. In other words, a win-win situation.
 
More information about the Seminar

Questions? Mail to toezichtrapportagesbanken@dnb.nl.