The change in legal reporting required by the Bank of Portugal, CRC 5G, aims to ensure compliance with the new requirements set by the ECB through AnaCredit (Analytical Credit Dataset) and to guarantee the consolidation of information reported to the Bank of Portugal. The new functionalities and streamlining of information reporting will include variables related to contracts and clients. This information will reside at the Bank of Portugal, classified by its nature, and after being aggregated, will form the basis for responses to AnaCredit.

The main purpose of collecting data in a systematic and standardized way is to allow for better analysis of information, to subsequently support participating entities in assessing the risk of granting credit through consultation of aggregated information on the indebtedness of entities requesting credit from them.

The information base will now be reported at the contract level instead of the current aggregated reporting of liabilities by debtor and respective analysis axes. The frequency of reporting, identification of important credit events such as new loans, amortizations, and changes in delinquency status will be communicated more effectively, quickly, and in an up-to-date manner, ensuring that data relating to the counterparty's financial and risk information are reported independently of accounting or credit risk information.

The major challenge for entities in the financial system now lies in their ability to meet the new requirements. There are questions that need to be answered in advance of implementation and on an individual basis, so that each one is done consistently. In particular, current systems will have to guarantee the requirements incorporated into the data models, with the desired level of granularity and quality, requiring adaptation for this transformation. The compilation of new information must ensure that the reported data is consistent at the time of information submission. This challenge represents impactful changes across all areas of banking, especially in IT, mainly due to the discontinuation of current reporting methods and the need to harmonize concepts and definitions, as well as the necessary minimization of efforts to achieve greater consistency in the information reported under a new communication model.

It is in this context that services specifically developed by technology consultancies emerge as strategic, focusing on information centralization, modular architecture models, and agile report creation tools based on governance rules and policies, and data quality. These models include resources that allow for the consolidation and harmonization of imported data into central repositories responsible for reliable and transversal availability throughout the organization.

The new CRC 5G, in addition to providing information services to participating entities, will represent the sole means of communication for specific credit information, allowing for the discontinuation of current reporting methods governed by various Instructions and Circular Letters. This is a very near future, with testing beginning in early 2018 and mandatory implementation from the second half of the year, coinciding with the end of the current CRC at the close of the first half of 2018. This represents an ambitious project of change and new challenges.

AnaCredit represents the commitment undertaken by financial institutions and other national authorities of the eurozone to banking supervision within the Eurosystem, in order to maintain the stability of the financial system and credit risk management. The information communicated will allow for the analysis of monetary policies, operations, statistics, and economic analysis to support strategic decisions. After the implementation of CRC 5G and the consequent response to AnaCredit, the eurozone monetary system will be provided with indicators that will support decision-making in credit allocation, protecting the jointly supervised financial system.

Published in Vida Económica