XBRL: The vision of Dexia

1
XBRL The vision of Dexia

• Pellizzari Giancarlo
• Head of Prudential Policy
• Dexia Group

2
Agenda

• Dexia an European group
• The regulatory environment
• Main challenges
• Complexity ?
• XBRL
• Where are we ?
• Where do we go ?
• How to do it ?
• EU-US convergence
• Conclusions

3
Dexia an European group

• Dexia Holding 27,5 EURBn Capitalization, world
  leader in public financing
• Dexia Bank Belgique
• Dexia Crédit Local (France)
• Dexia BIL (Luxembourg)
• FSA (Financial Security Assurance) USA Credit
  enhancement
• Dexia Insurance Belgium
• Deniz Bank (6th largest private bank in Turkey)
• Factoring, leasing, real estate, IT, etc.
• A group of 241 entities, 33.321 staff members and
  present in 33 countries

4
Dexia an European group
Business portfolio Segment contribution to net
income - Group share (1)
Treasury and Financial Markets
(1) Excluding non-operating items and central
assets
Asset Management
Investor Services
Insurance
Public/Project Finance and Credit enhancement
Personal Financial Services
Net income Group share FY 2005 EUR 2,038
M FY
2006 EUR 2,750 M
5
The regulatory environment

• Home host supervisors
• Home supervisors (working in a college)
• CBFA Belgian Banking, Finance and Insurance
  Commission (as lead supervisor)
• The French Commission Bancaire
• Commission de Surveillance du Secteur Financier
  (Luxembourg)
• Host supervisors
• EU supervisors
• Bundesbank Bafin (Germany)
• Banca dItalia (Italy)
• Banco dEspana (Spain)
• Etc.
• Other countries
• BRSA (Turkey)
• SEC (USA)
• OFSI (Canada)
• Japan FSA
• Singapore
• Etc.

6
The regulatory environment

• The reporting
• COREP
• Group level Belgium
• Entity level Belgium, France, Luxembourg
• Subsidiary level Italy, Austria, Germany, etc.
• FINREP
• Group level no reporting required
• Entity level Belgium, France, Luxembourg
• Subsidiary level Italy, Austria, etc.
• Others
• USA requirements, Solvency ratio, local
  requirements

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Main challenges

• Cross regime requirements (IFRS, Basel II,
  Solvency II)
• Cross country interpretation (within one single
  regime)
• Cross business needs (Risk, Accounting, Business
  control, others ?)
• Timeline for implementing CEBS update in the IT
  systems of the bank
• CEBS release March 200x
• End of consultation June 200x
• Application for March 200x1
• Without taking into account the national
  extensions
• All these should be integrated in
• One IT system
• One platform
• One database

8
Complexity ?

• Basel II IFRS Solvency II
• Pillar I Pillar III IFRS 7 F/S
  Pillar III Pillar I
• notes
• Group Group Group
  Group BE (group) BE
• BE FR LU BE FR LU BE FR
  LU BE FR LU

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XBRL the current situation
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XBRL the current situation (the accounting
environment)
IFRS
IFRS
IFRS
IFRS
IFRS
Crediop
FSA
IFRS
IFRS
IFRS
US GAAP
No Conso (BE GAAP)
Lux GAAP
Banking institutions Insurance companies Other
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XBRL the current situation (the accounting
environment)
FINREP
XBRL
COREP
XBRL
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XBRL the current situation

• Many EU countries where Dexia is active are using
  XBRL as reporting language but
• Not in all countries
• Mostly presented and implemented as an additional
  burden
• In Belgium an additional XBRL reporting is
  required for the Balance Sheet Office reporting
  (statutory accounts of approx 270.000 companies),
  National Bank of Belgium.

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XBRL Advantages

• Use XBRL as a tool for more harmonization,
  flexibility and gain of time both vertically and
  horizontally
• We thus need
• XBRL at the beginning of the reporting processes
  (public, COREP, FINREP and internal)
• Softwares that read XBRL
• One integrated database (kind of Group taxonomy)
•  One fits all 

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XBRL Advantages

• Used by credit departments
• Used instead of xls on websites (like Microsoft,
  Monte dei Paschi di Siena, etc.)
• Other regulatory reporting (like VAT and tax in
  NL, AML in Spain, etc.)
• Internal reporting (reconciliation Consolidation
  and Risk databases)
• Mapping with new regulatory requirements
• Necessity to create a working group within the
  group with technical specialists and business
  specialists
• Better coordination
• Decrease of cost

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XBRL Advantages

• A potential integration tool for the group
  reporting
• External
• Known and understood by all
• May be the base of a worldwide reporting
• May avoid repetitive reporting in different
  presentations, but with the same content to
  regulators and local authorities
• Internal
• May be the base for internal reporting
  (consolidation)
• May allow drill-down analysis with a good
  organisation of taxonomy
• Will make the life easier for Financial
  Communication and members of the Boards when they
  compare the contribution of one company in the
  consolidated accounts with the financial
  statements published by a subsidiary in its
  country

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XBRL Advantages

• A potential integration tool for groups
• Only one reporting, for internal and external
  reporting
• Possibilities for people to move from one company
  to another
• Advantage for managers to understand how
  transactions are recorded and the impact on the
  financial statements
• Powerful tool for the controller and people from
  investor relations to analyse the contents of the
  financial statements, both in the group and sub
  groups, including the local regulatory reporting
• Use of IFRS and worldwide taxonomy may help
  groups to more easily integrate newly acquired
  subsidiaries

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XBRL the issues

• Regulatory interpretations
• Example
• Collateral definition
• Equity split
• Counterparties
• Calculations
• Etc.
• Software offer
• COREP FINREP
• IFRS
• Internal
• Motivation of people (difficulty to see the
  benefits)

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How to solve it ?

• Stronger CEBS policy, but also more communication
  to banks with regards to the XBRL benefits (XBRL
  should not be a cost and administrative burden)
• Stronger banking industry involvement
• Software providers needs to understand the banks
  real needs
• One single definition of taxonomy

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EU US convergence

• Press release of April 2007 cooperation between
  US and EU, including regulatory matters
• BUT

SEC-FDIC
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Conclusion

• Within ONE group
• ONE tag
• ONE definition
• ONE validation/business rule
• ONE taxonomy
• ONE country
• ONE EU reporting

ONE CEBS (FINREP-COREP) EU base reporting
completed by additional country requirements gt
Need to follow the XBRL principles