What is COREP?
Common Reporting (COREP) was first introduced in 2006 to standardize supervisory reporting across EU member states
Before COREP, each country had its own reporting framework, with manual processes leading to fragmented and inconsistent data. Initially managed by the Committee of European Banking Supervisors (CEBS) it is overseen by the European Banking Authority (EBA) since 2011.
COREP (Common Reporting) is an integral part of the Capital Requirements Regulation version 3 (CRR3)
CRR3, which aims to finalize the implementation of the Basel III reforms in the EU, includes several updates to prudential requirements for banks and investment firms. These updates necessitate changes in the way institutions report their financial and risk data, which is where COREP comes in.
COREP provides a standardized framework for reporting various aspects of regulatory capital, risk exposures, and other prudential metrics
Under CRR3, COREP has been updated to reflect new requirements, such as more granular reporting on credit risk, market risk, and operational risk. This ensures that the data collected is consistent, comprehensive, and aligned with the new regulatory standards.
Key objectives of COREP
A high level of harmonization and strong convergence of reporting
A fundamental objective of COREP is to enable regulators to compare and evaluate data more effectively across jurisdictions.
Enhanced supervisory oversight
More detailed and accurate disclosures mean regulators can better assess the financial health of institutions, providing a stronger early warning systems in place to detect and address risks promptly.
Strengthened regulatory compliance
More granular and detailed data allows regulators to more effectively verify compliance with capital adequacy and risk management requirements outlined in CRD/CRR. This improved transparency will enhance cross-border supervision, reduce discrepancies in reporting, and strengthen the overall stability of the financial system.
Who does COREP affect?
COREP impacts credit institutions and investment firms across all EU member states including the European Economic Area (EEA). Key stakeholders, such as risk managers, regulatory reporting managers, compliance officers, and financial controllers must be prepared to implement these changes.
Key Challenges to COREP Compliance
⇢ Data management
Firms must gather, validate, and manager large volumes of granular data across multiple systems, accurately and consistently.
⇢ Regulatory updates
Changing regulatory requirements need regular adjustments creating a challenge for maintaining compliance.
⇢ Operational burden
More detailed, frequent reporting increases workloads for multiple departments, requiring significant time and resources to meet deadlines. Overall the standardized reporting required by COREP will require many to evaluate and update their models, processes and systems.