3 answers to 3 questions: the Integrated Reporting Framework

The Integrated Reporting Framework - IReF for short - is intended to simplify reporting for banks. Silvia Schütte is an expert on banking regulation at the Association of German Banks and answers the most important questions.

1. The start date for the Integrated Reporting Framework has now been pushed back to the fourth quarter of 2029. But what is the Integrated Reporting Framework?

The Integrated Reporting Framework – or IReF for short – is a project started by the ECB and the national central banks. The goal is to improve the efficiency of financial reporting. Currently, credit institutions must meet a large number of reporting requirements. The scope of these requirements has continued to grow, with requirements only being added, none removed. Over time, this has resulted in a truly confusing maze of reporting obligations for institutions to navigate. Simplifying these reporting requirements is an enormous undertaking that cannot be achieved all at once, but must instead be done slowly and surely over many smaller steps. The Integrated Reporting Framework is the first of these steps, and will initially focus on statistical reporting. The goal is to streamline the entire reporting process for statistical reports. These include the balance sheet and interest rate statistics, as well as AnaCredit. The basic principle behind IReF is that banks will, in the future, deliver detailed information on the level of individual transactions to supervisors. This information will replace summarised reports using forms or templates. The individual data can then be combined as necessary and shared between authorities, something that is currently not possible. This will reduce or entirely eliminate the duplicate reporting that is currently par for the course. 

2. The industry has been calling for streamlined reporting for some time now. Is the IReF the breakthrough we need?

It’s true that the banking sector has been calling for more efficient reporting regulations for a long time. The many years of criticism have finally been heard by the supervisory authorities, who share our views. Every step we take towards a modernised reporting system is essential. We are particularly pleased to see European and national authorities working more closely together. This is particularly true for the cooperation between the EBA and ECB and national supervisory and statistical authorities. If the initiative is to be successful, cooperation between individual authorities must be seamless. 

3. So far, so good. But why is there another delay?

There are still many unanswered questions surrounding the IReF. As such, we welcome the postponement. It will give banks and supervisors more time to prepare for the new reporting requirements. 

One particularly important point, especially for banks operating internationally, is unified implementation across Europe. A reminder: the introduction of AnaCredit, the credit register for individual bank loans, was hardly a rousing success. AnaCredit was implemented differently in almost every country within the euro area, which made unified implementation within a corporate group very difficult, if not impossible. In light of this, we have to ask whether the IReF will truly reduce bureaucratic burdens over the medium to long term. If it does, it will because national reporting, above and beyond the statistical reports currently in focus, is fully integrated into the IReF. The goal should be to eliminate national reporting requirements – after a suitable period of parallel reporting, of course. Although AnaCredit was introduced six years ago, the German credit register of loans of €1.0 million or more – which was supposed to be replaced by AnaCredit – is still going strong. So it will be  very important to take advantage of the additional time to implementation: we need to clarify the interplay of national reporting requirements and the IReF. And we also need to clarify how the German Bundesbank will supply an analysis of the data in the future. Statistical information from the Bundesbank, such as monthly reports, is essential for businesses, banks, consulting firms, ratings agencies, financial analysts and academics. The IReF must guarantee continued public access to this data.   

One thing is clear: we welcome the fact that there is now more time to implement the IReF and discuss unanswered questions. The IReF could be the start of something big. But it will only pay off for the banks over the long term if, over the medium term, the IReF is expanded to include not just statistical reporting, but also supervisory reporting and that relating to resolutions.