THE FRENCH CENTRAL CREDIT REGISTER

Transcription

1 FACT SHEET N 115 THE FRENCH CENTRAL CREDIT REGISTER The French Central Credit Risk Register was set up in Its objective was twofold: - to enable all banks to satisfy their customers loan applications as fully as possible without incurring excessive risk, - to provide monetary policy-makers with all the credit-related information that could be useful to their decision-making. The compilation of credit risk data continues to be governed by this twofold concern that is both prudential and informative. This fact sheet provides a brief history of the register and describes the risk compilation framework and procedures. COMMUNICATION DEPARTMENT OCTOBER 1999 UPDATE MARCH 2003

2 1. HISTORICAL BACKGROUND Before 1946, as credit institutions lacked centralised information on their mutual liabilities, they did not have access to all the data enabling them to assess their customers real level of debt. There was therefore the risk that granting a loan that was disproportionate to the financial base of a company could set off a negative chain reaction that, in times of economic slowdown or crisis, could result in serious systemic disruptions. In 1931, during the Great Depression that started in 1929, the 5 th French Banking Congress officially launched the idea of centrally compiling credit risk data. it however took several years and the establishment of organisations such as the Association professionnelle des banques, the Commission de contrôle des banques and the Conseil national du crédit, to lay the legal groundwork for the setting-up of a credit register. According to the general decision by the Conseil national du crédit on 7 March 1946 that set forth the framework for the compilation of credit risk data, the primary aim of the project was to help credit institutions respond to their customers loan applications as fully as possible without incurring excessive risk. Another goal was to provide the Conseil national du crédit with all credit-related information likely to help it in its role of guiding the distribution of credit. The centralisation of risk data continues to be governed by this twofold aim: prudential supervision and informing monetary authorities. In light of its role and history, the Banque de France has appeared from the outset as the natural compiling body. It is therefore within the central bank that the Central Credit Register Unit, responsible for organising and running the Central Credit Register, was set up by virtue of the decision of 7 March The following institutions were required to report regularly to the Register: from the outset: credit institutions, from 1959 to 1995: social security agencies (for social security payment arrears), from 1993: the Caisse des dépôts et consignations. 2. SCOPE OF CREDIT RISK COMPILATION 2.1. Reporting institutions The following institutions are required to compile data on credit risk: credit institutions covered by France s 1984 Banking Act, which to a large extent is now incorporated in the Monetary and Financial Code, as well as branches of the Caisse des dépôts et consignations located in metropolitan France (i.e. continental France, Corsica and the Principality of Monaco) and in the French overseas territories, and as of 1 January 2002, branches in the French overseas departments (Guadeloupe, Martinique, Guyana and Reunion) and in the territorial units of St Pierre and Miquelon and the departmental unit of Mayotte Borrowers Data are compiled on all firms and legal persons, irrespective of their legal status (companies, economic interest groupings, government agencies, local authorities, associations, trade unions, etc.), as well as self-employed natural persons (sole proprietors), whether based in metropolitan France, in the French overseas departments and territories or abroad. Data on loans granted to credit institutions are compiled in two cases: for loans granted to institutions whose head offices are located abroad, irrespective of the term of the buyer credit facility, and for all other loans issued with a maturity of more than one year. At end-june 2002, a total of 754,485 borrowers were registered. 2

3 2.3. Type of exposure reported Risks are divided into two main categories: loans and off-balance sheet liabilities. Two additional categories cover data reported for securitised loans ( IT ) and information on commercial paper provided by the Banque de France ( IE ). The reporting categories match those used in the financial statements transmitted to the General Secretariat of the Commission Bancaire (the Banking Commission) Loan categories 2.4. Risk-reporting threshold The threshold for reporting exposures is adjustable. Two reporting thresholds have co-existed since January 2002: EUR 76,000 for reporting institutions located in metropolitan France and the French overseas territories. EUR 45,000 for reporting institutions located in the French overseas departments (Guadeloupe, Martinique, Guyana and Reunion) and in the terri torial units of St. Pierre and Miquelon and the departmental unit of Mayotte. Short-term loans CO: Overdrafts on ordinary accounts CA: Other loans CC: Accounts receivable financing included in CO and CA CD: Foreign-currency denominated loans included in CO and CA 3. RISK DATA COMPILATION 3.1. Data collection Medium and long-term loans TE: Export credits TA: Other loans (equipment, housing, etc) TD: Foreign-currency denominated loans included in TE and TA Finance leases and leasing BM: Equipment leases BI: Property leases Off-balance-sheet liabilities Guarantees AC: Guarantees Lines of credit OC: Undrawn portion of forward loans granted OD: Undrawn portion of documentary credit Securitisation and commercial paper IT: IE: Securitised loans Commercial paper Transmission of data Reporting institutions submit monthly risk data to the Banque de France s Central Credit Register Unit that has been located in Poitiers since Data from several reporting institutions may be grouped together. Most of the returns are filed via computer data links, i.e. 96.7% of the reports received in June 2002 and 92.9% of the loans listed. Diskettes are the other main reporting medium. Overall, virtually 100% of the reports are submitted in electronic form and may therefore be directly processed by computer. Paper returns, which are destined to become obsolete, are filed mainly by institutions that, individually, make a very low number of returns, i.e. less than ten. These returns must be transferred onto diskettes before they can be processed Data processing Three-quarters of the average of 25,000 initial reports on new loan recipients filed monthly by reporting institutions are automatically validated by cross-checking them with the information contained in the 3

4 FIBEN Banking Database on Companies. As soon as they are set up, companies that are recipients of bank loans are recorded in FIBEN via INSEE files and registrars of commercial courts. The remaining one-quarter of reports, which are returns that have been incorrectly filed, are checked manually and then either validated or rejected. reporting institutions seeking to improve their internal control procedures and their knowledge of the credit market, the General Secretariat of the Commission Bancaire in the performance of its prudential supervision duties, Banque de France branches that wish to enhance their knowledge of local economic and financial structures 3.2. Dissemination of the compiled data Dissemination of monthly summaries to reporting institutions Reports on a single borrower submitted by several institutions are grouped together under the specific SIREN company registration number assigned to this borrower. In exchange for each of its reports, the reporting institution receives, via the same medium as that used for its returns, a summary providing a breakdown of all the loans granted to the borrower. If a reporting institution ceases to file returns on a borrower, the summary is nevertheless still sent for three months following the discontinuation of or break in reporting, providing that other institutions continue to report loans granted to this borrower. These monthly summaries do not feature the names of the reporting institutions Dissemination of all-inclusive information to the Banque de France or to reporting institutions The information that may be obtained from the Banque de France s Credit Register is of interest to a large number of the Bank s departments and to external bodies such as the Fédération bancaire française (the French Banking Federation), the Commission Bancaire, legal bodies, etc. Given the growing demand for information on credit risk, the Central Credit Register has developed a wide range of tailor-made products for internal or external use that meet the varied needs of: The data contained in the Credit Register may be associated or combined with other descriptive, accounting or financial information from the FIBEN Database. This makes it possible to obtain aggregated data on the following, for instance: - loan categories, - economic sectors, - reporting institutions, - geographical areas, - legal status of loan recipients. Some of this aggregated data is published periodically. An example is the compiled data broken down by economic sector, broad loan category, geographical area and legal status of borrowers that is published every quarter in the statistical supplement of the Banque de France s monthly Bulletin (it may be consulted only on the Bank s website: For monetary authorities, centrally-compiled risk data constitute a mine of information on current economic conditions. This mine is also extensively exploited by reporting institutions via other statistics compiled specifically for them by the Central Credit Register and the Banque de France s branches. These statistics enable them to better assess their positions with regard to: a specific market (territorial units, SMEs, etc.), a corporate grouping defined either by the scope of consolidation or by the list of SIREN numbers supplied by the institution making the request. The data may be supplemented by a presentation in map form. Strict confidentiality rules apply to all statistical analyses provided. 4

5 4. CONCLUSION In operation for over 50 years, the French Central Credit Register has fulfilled its twofold prudential and informative role. The Central Credit Register must nevertheless constantly adapt to the new conditions under which it is required to operate, namely new financing techniques, increasingly intertwined economies, the IT revolution, etc. In this rapidly-evolving environment, the French Central Credit Register has launched or is on the verge of launching some important projects in conjunction with the banking industry and the General Secretariat of the Commission Bancaire. Some of these projects have an international reach. The Central Credit Register thus plays an active role in the Working Group on Credit Registers that brings together representatives of credit registers from seven European countries Austria, Belgium, France, Germany, Italy, Portugal and Spain with the aim of making risk data exchanged between the registers available to reporting institutions. 5

6 APPENDIX RISK DATA COMPILED ON 30 JUNE 2002 Breakdown by transmission medium (EUR billions) TYPE OF NUMBER OF MEDIUM REPORTING INSTITUTIONS Computer data links 484 % NUMBER OF RETURNS % OUTSTANDING REPORTED , ,022.4 % 92.9 Diskette , Paper TOTAL , , SHORT-TERM LOANS Overdrafts on ordinary accounts Other short-term loans o/w accounts receivable financing o/w foreign-currency denominated loans MEDIUM AND LONG-TERM LOANS Export credits Equipment, housing and other loans o/w foreign-currency denominated loans LEASING Equipment leases Property leases Breakdown by loan category (EUR billions) LOAN GUARANTEES UNDRAWN PORTIONS OF LOANS Confirmed loans with a term of more than one year Documentary credit SECURITISED LOANS 1.9 COMMERCIAL PAPER 73.8 TOTAL AL 1,

7 APPENDIX (suite) Breakdown by economic sector (EUR billions) A - Agriculture, hunting and forestry 24.0 B - Fishery and aquaculture 0.7 C - Mining and quarryng 7.5 D - Manufacturing E - Production and supply of electricity, gas and water F - Construction G - Wholesale and retail trade, repair of motor vehicules 90.6 H - Hotels and restaurants 14.5 I - Transport and communication 80.6 J - Financial activities K - Real Estate, renting and business services L - General government M - Education 1.7 N - Health and social work 23.5 O - Community, social and personal services 15.9 P - Domestic services 0.1 Q - Extra-territorial bodies 2.0 Z - Other 2.2 TOTAL AL 1,100.4 For information, contact the Banque de France Central Credit Register (Service central des Risques) at the Poitiers administrative centre Tél: +33 (5) Fax: +33 (5)

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