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Complete Automation of Regulatory Reporting of Banks to CNB / EBA in FinLink System (including Consolidation)

Several significant banks in the Czech Republic use solutions of Ariton Company for the automation of regulatory reporting. Automation covers all CNB/EBA reports in the areas of banking supervision and statistics that are required from a bank residing in the Czech Republic (and thus subject to capital adequacy), both on individual and consolidated bases (including prudential consolidation).

Methodical and Data Consistency Review of the Reporting Process

Clients of Ariton appreciate that as standard part of the implementation of FinLink System, Ariton performs a very detailed methodical review and review data consistency and procedures used when preparing reports. Results of this analysis and suggested procedures to solve the methodical or data issues that are found, are presented in an overall methodical report.

Complete Automation of Internal Reporting to Parent Company (Consolidation)

Many clients use the implemented solution even for the automation of internal reporting to the parent company, i.e. for generating the new European reports on a brutto as well as netto basis for the parent company, and even to prepare the required outputs for the group consolidation prepared by the parent company.

Automation of Regulatory Reporting to CRÚ (Central Credit Register) in FinLink System

Several banks use FinLink System for automated reporting to CRÚ (Central Credit Register). The solution ensures automated data processing and generation of outputs for the Central Credit Register (including automated derivation of receivable status and termination records when receivable expires). FinLink System also offers comparison of data related to loans, guarantees, and loan commitments reported to CRÚ and those reported in regulatory reporting to CNB and thus consistency between these two areas of reporting is guaranteed.

Processing of Annuals Reports (IAS / IFRS) Subject to Auditing Requirements

Furthermore, Ariton is preparing – for its clients - the Annual Reports (including the related document in MS Office) in an automated way and Ariton also helps during finalization and verification of Annual Reports by auditors. The reports required for annual reporting are developed to reflect client’s needs and are fully automated in FinLink System. The solution guarantees automated transfer of values from the reports in FinLink to the document (MS Office) containing the Annual Report. Above that, to each value in the MS Office document, the set of all underlying records forming the particular value of the financial statement / annual report in the MS Word document can be displayed.

Advisory Services related to Liquidity Management

As a standard part of the service, calculations for liquidity management (LCR, ALMM) and stable financing (NSFR) are provided to the clients.

Automation of Regulatory Reporting to NBS in FinLink System

Services and solutions of Ariton Company for automation of regulatory reporting to NBS are used by several branches of foreign banks in Slovakia. Automation covers all NBS reports in the areas of banking supervision and statistics that a branch of foreign bank reports on a regular basis to NBS. Scope of the services provided includes complete methodological advisory in the area of bank regulation (including tracking of on regulatory changes and assessing their impact on the client, reflecting the changes into the systems of the client etc.). In several cases the project also included the definition and creation of a data mart for regulatory reporting purposes. FinLink System has greatly simplified/improved and speeded up the process of reporting and it enables its users to focus on ensuring and verifying quality of input data and methodical aspects of reporting (instead of spending time on tiring and error-prone manual routine).

Advisory Services related to Capital Adequacy and Large Exposures

The logic and specially the related know-how for the calculation of capital requirements (Basel II, CRR / CRD IV – credit risk, market risks, operational risk, capital buffers, …) is provided to the clients as a standard part of the service and the clients use it for capital adequacy management and management of large exposures.

Smooth Transition to New Reporting Requirements based on CRR/CRD IV, COREP and FINREP

Ariton provides to its clients the following services related to changes in the regulation and requirements as a result of the new European regulation: methodological consultations (capital adequacy, capital requirements, credit risk, market risk and operational risk, large exposures, leverage ratio, asset encumbrance), consultations on adjustments in internal processes, methodical procedures and internal data sources for full automation of new reports in the FinLink System.

Automation of Regulatory Reporting (Capital Markets) to CNB / ESMA for Securities Traders in the FinLink System

Automation of regulatory reporting includes all reports related to securities trading (orders, trades, instruments, entities) and also reports related to custody services.

Basel III and Voluntary Monitoring by CNB Related to the Implementation of CRD IV / CRR

Ariton consultants prepared for their clients a complete set of quarterly reports required by CNB as a part of voluntary Basel III monitoring exercise (initiated by Basel Committee as part of Basel III implementation). These included capital, liquidity coverage, stable funding, and leverage ratio.

Assessment of the Quality and Consistence of Data Sources

Clients of Ariton very much appreciate, that FinLink System includes sophisticated verification logic to evaluate the consistency among data outputs from different source systems and offers an elaborated set of validations ensuring the data quality (reconciliation between general ledger balances and totals of detailed data from individual source systems, reconciliation of balance sheet sums (assets equal liabilities and equity), dependency validations, number format checks, code table validations and similar). FinLink System displays detected problems in a clear and easily understandable format with the possibility to drill-down to every individual record/source system where discrepancy was detected.

Effective and Fully Automated Communication with CNB

The delivered solution offers to clients of Ariton a simple and quick method of sending all reports in one click through the web services to CNB. Thanks to FinLink System the clients are able to achieve reductions in costs associated with communication to the CNB because communication via the Web service requires only Internet connection (no need to pay expensive EDIFACT lines and operate the demilitarized zone). Additionally, all communication with the CNB proceeds directly from the FinLink System and therefore does not require any additional application or even an additional vendor.

Professional Advisory Services

The scope of services provided by Ariton to its clients includes consultations on calculating the fair value of derivative trades and securities according to IAS / IFRS, advisory in accounting of securities and methodological consultations related to the contents of regulatory reports, relations within reports, and methodology recommendations leading to long term consistency of reported values.

Advisory Services Related to a Grant of Authorization to Provide Investment Services (CNB)

Ariton has provided its expert methodical knowledge to one of its clients when preparing the official request for a Grant of Authorization to provide investment services and trading activities in the territory of Czech Republic (subject to CNB authorization).

Complete Automation of Regulatory Reporting to CNB / EBA for Investment Firms / Securities Traders in the FinLink System

Several investment firms / securities traders use the solutions of Ariton for automation of regulatory reporting. The automation covers all financial reports (FINREP) as well as all prudential regulatory reports (COREP, CRR / CRD IV, LE, LR, AE). The solution verifies data consistency between accounting and trading systems. It also offers an evaluation of all validations and relations defined by CNB, therefore reports are submitted to CNB free of errors.

Complete Automation of Regulatory Reporting to CNB / EBA for Credit Unions in FinLink System

Services and solutions of Ariton are used by several credit unions. Automation of regulatory reporting includes all new reports required by EBA – COREP and FINREP: capital and capital requirements, credit risk, market risks, operational risk, large exposures (LE), liquidity coverage (LCR, ALMM), stable funding (NSFR), asset encumbrance (AE) and new FINREP reports. The implemented solution verifies and guarantees consistency of input data and ensures error-free delivery of reports. FinLink System eliminated manual (and error prone) routines and all other user changes to data and reports and as a result the users are able to focus on the business aspects of regulatory reporting and on verifying source data quality and consistency (FinLink System provides powerful tools for this).

Calculation of Fair Value of Derivative Trades and Securities according to IAS / IFRS

As part of the advisory services, Ariton prepared logic for the calculation of fair values of hedging derivative transactions (hedging of currency risk) and also logic for the calculation of effective interest rate for pricing purchases of securities and also prepared the individual booking entries to be entered into the accounting system over time for these deals.

Implementation of Data Warehouse to Ensure Data Integrity and Consistency

Data warehouse was implemented as part of the FinLink System with an aim to create a unified base to systematically collect data from source systems and to verify their quality. Data warehouse included custom-made validation logic to verify data consistency and to manage data quality.

References

Ariton is providing its services and solutions to more than fifteen clients from several sectors: the banking sector, investment firms and securities traders sector and credit unions sector. The scope of services provided/used is very large, therefore below we present only a selected subset.

Banking Sector