What is FINREP?
The meaning of “FINREP” itself is “Financial Reporting.”
The European Economic Area (EEA) and the European Banking Authority (EBA) requires banks to create FINREP reports. Enacted September 30, 2014, FINREP increased the amount of information banks had to disclose in their financial reports. Specifically, the income statement and balance sheet must now highlight more granular data from the general ledger. In addition, FINREP requires banks to submit quarterly reports that contain a whopping 40+ forms/templates and 3,500 data fields.
What are the objectives of FINREP?
FINREP’s objective, summarized by PWC, is as follows:
- Standardize reporting: To standardize reporting requirements across Europe in order to reduce the impact of multiple regular reporting requirements from different European supervisors.
- Central repository: Establish a central repository for European banking data to enable improved risk identification and management for cross-border institutions.
- Enable analysis: Facilitate peer reviews, trend predictions, risk analysis and provide greater transparency, especially on cross-border institutions.
- Data Sharing: Enable data to be easily shared with national and international authorities, supervisory colleges, ESRB and ESAs.
Who is affected by FINREP?
FINREP applies to credit institutions, banks and investment firms that are listed on a stock exchange, prepare IFRS compliant financial statements, and are subject to CRD IV.
Why was FINREP introduced?
To promote greater transparency, the EEA and the EBA wanted to harmonize European banks and investment companies. The solution? They introduced the Capital Requirements Directive IV (CRD IV) which came into effect January 1st, 2014. The regulation requires two reports: Common Reporting (COREP) and Financial Reporting (FINREP).