Measuring intra-bank complexity by (not) connecting the dots with LEI. A supervisor perspective

It is ten years ago that the Legal Entity Identifier (LEI) has been introduced, after the initiative was born out of the global financial crisis of 2008. The LEI is a globally accepted unique identification code for entities that participate in financial transactions. It contains information on the ownership structure of the entity and thereby does not only provide information on ‘who is who’, but also on ‘who owns whom’. The latter is very useful for getting a comprehensive view on the group structures of an entity. In this study we use the LEI data to measure the intra-firm complexity of 35 European banks. We find that – at least currently – the coverage of the LEI data is too low for measuring intra-firm complexity. However, our analysis does show the potential of the LEI data. For example, the data provide relevant insights for recovery and resolution purposes since it contains information on group structures or for making anti-money laundering measures work more effectively by tracking parents and subsidiaries located in offshore centers.