Implementing XBRL for a cross-border banking group in Europe

1. Implementing XBRL for a cross-border banking group in Europe Giancarlo Pellizzari Head of Prudential Policy Dexia Group Paris, June 22nd to 25th, 2009

2. Agenda • Implementing XBRL for a cross-border banking group in Europe Agenda Introduction What does XBRL mean for Dexia? Experiences COmon REPorting FINancial REPorting IFRS Taxonomy Conclusion

3. Agenda • Implementing XBRL for a cross-border banking group in Europe Introduction Introduction What does XBRL mean for Dexia? Experiences COmon REPorting FINancial REPorting IFRS Taxonomy Conclusion

4. Introduction • Implementing XBRL for a cross-border banking group in Europe What is Dexia ? A group of approx. 250 entities, more than 28.000 staff members, present in 37 countries (21 EU member countries)

5. Introduction Implementing XBRL for a cross-border banking group in Europe Our Environment • In terms of Reporting: • Public Reporting • Solo Financial Statements in local GAAP (or IFRS when allowed) and Conso Financial Statements in IFRS or local GAAP (Dexia Group using IFRS at consolidated level) • Pillar III (Basel II public reporting) • Regulatory Reporting • COREP • FINREP • Pillar II • MIFID • ECB Statistics • SEC filings • Other local GAAP reporting (Schema A, BAFI, etc.) • Other Reporting • Tax • Legal/social

6. BE FR LU STATUTORY CONSOLIDATED CONSO DHLD SAP Holding INTERNAL REPORTING MAGNITUDE COMMON PARAM CONSO DBB CONSO DCL EXTERNAL REPORTING DBB SPEC. LOCAL PARAM CONSO DBL DCL CHECK CHECK DBL VISUAL SCOPE MIS CONSO ESSBASE Introduction Implementing XBRL for a cross-border banking group in Europe Our Environment

7. Introduction • Implementing XBRL for a cross-border banking group in Europe 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

8. Introduction • Implementing XBRL for a cross-border banking group in Europe Complexity? (Example) Maximum Credit Risk Exposure is referred to in Solvency II, Basel II and IFRS regulations. Of course, as the regulations are different, a slight shift in the definition is present and leads to distortions of the presentation of the same concept in the different reports. As highlighted on the next slide, the same information is requested in three different reporting. A complete reporting under XBRL could help providing an harmonized concept and avoid double or even triple entries for one information. Furthermore, no precise and harmonized definition does exist, some reporting companies are considering full exposure, other “non-depreciated” exposure etc.. Above the problem of definition, another challenge is to comply with all the different interpretations for each country. Cross-border reporting turns out to be a real nightmare.  Find a definition internally that may fit all regulations.

9. Agenda • Implementing XBRL for a cross-border banking group in Europe What does XBRL mean for Dexia? Introduction What does XBRL mean for Dexia? Experiences COmon REPorting FINancial REPorting IFRS Taxonomy Conclusion

10. What does XBRL mean for Dexia ? • Implementing XBRL for a cross-border banking group in Europe Why is XBRL interesting for a preparer? • Organizing the presentation of financial statements • True and fair view (Framework §46) • Respect of accounting standards use for preparation • … • and neutrality (Framework §36) A good preparer must therefore compare regularly its financial statements with the ones of its peers (information to be obtained from Financial Communication department or analysts surveys), to be sure that its options are in line with the others Therefore : benchmarking !

11. What does XBRL mean for Dexia ? • Implementing XBRL for a cross-border banking group in Europe Why is XBRL interesting for an analyst? Reviewing the financial statements Base of presentation Options selected in accounting standards Valuation principles Compare them with peers (Framework § 39) Etc… A good analyst must therefore compare regularly the Financial Statements, mainly the disclosures, presentation and valuation policies, to be sure that the financial statements are comparable Therefore : benchmarking !

12. What does XBRL mean for Dexia ? • Implementing XBRL for a cross-border banking group in Europe The Past Dexia is active in XBRL since 2003... WHY? We saw the regulators’ attraction to XBRL because it was the right IT language to fit their needs in IFRS and Basel II reporting XBRL was seen as a powerful tool for reducing administrative burden internally (Use XBRL as a tool for more harmonization, flexibility and gain of time both vertically and horizontally) Importance of exchange of data in a cross border banking group (Internally and externally) Importance of having one language with all regulators

13. What does XBRL mean for Dexia ? • Implementing XBRL for a cross-border banking group in Europe The Present Dexia is still active in XBRL: Participation (as much as possible) in regulators’ discussions on XBRL Participation in XBRL International conferences Thierry Nederlandt, Head of Accounting and Consolidation (Dexia Group), member of the XBRL Advisory Council (XAC) of the IASC Foundation Use of XBRL in various regulatory reporting in European countries: COREP FINREP MIFID Pillar II Chosen for a flexible XBRL approach/tool (instead of a regulatory approach/tool) allowing easy internal and external developing capabilities

14. What does XBRL mean for Dexia ? • Implementing XBRL for a cross-border banking group in Europe The Present Staying up to date on the current evolutions permits the group to stay aware of the future requirements that will be applicable in the next steps of implementation of XBRL and to already prepare the staff and the processes in order to enter easily in action for each update; Dexia also answers to draft papers and taxonomies from IASCF and other regulators to support the financial industry’s specificities and our vision. Dexia is already adapting it’s IT infrastructure in order to benefit, internally, from the advantages of an harmonized system. Fast close Comparability (Internal & External) Mutualization of knowledge Internal managerial information etc…

15. What does XBRL mean for Dexia ? • Implementing XBRL for a cross-border banking group in Europe The Future XBRL to be used by more and more financial reporting stakeholders: Stock exchanges Rating agencies Other… XBRL to become not only an external language of communication but also internal Banks to create their own extensions or their own taxonomies? Referring to the US where 12 different taxonomies are already in use; considering the specificities of the industry. Or having particular extensions and dimensions to keep one single reporting line but also respecting industries specificities

16. Agenda • Implementing XBRL for a cross-border banking group in Europe Experiences Introduction What does XBRL mean for Dexia? Experiences COmon REPorting FINancial REPorting IFRS Taxonomy Conclusion

17. Agenda • Implementing XBRL for a cross-border banking group in Europe COmon REPorting Introduction What does XBRL mean for Dexia? Experiences COmon REPorting FINancial REPorting IFRS Taxonomy Conclusion

18. Each regulator has changed the EU base taxonomy (red box) • to fit with its needs, leading to several taxonomies and • huge costs for EU global banks • But CEBS has now committed • “to deliver EU-wide reporting • formats in 2012 for all credit • institutions and investment firms • located in the European Union” Experiences : COREP • Implementing XBRL for a cross-border banking group in Europe “Pure Regulatory” Reporting COREP (COmmon REPorting – Pillar I reporting under Basel II framework), could become a real nightmare… Starting from a single and unique European data model, regulators modified it to fit their own local needs Some banks (locally active mostly) were also arguing for modifying the European model Regulators also changed the definitions of concepts Resulting for crossborder banks in a nightmare, where the same reporting element may be computed and reported in many different ways (12 COREP for Dexia) But will be adjusted to a REAL COmon REPorting in 2012 (?) MIFID and Pillar II Reported in XBRL only in Belgium To be adopted by other EU countries ?

19. Experiences : COREP • Implementing XBRL for a cross-border banking group in Europe Regulatory failure: risk with future evolution We need to be careful any proposed regulatory intervention itself does not lead to further regulatory failure. Two potential avenues for such regulatory failure are described below: If the proposal sets harmonised requirements for information that is so high that compliance costs for firms are greater than benefits for the market as a whole; or If the proposal requires a too low ceiling (key data are not collected, leading to net costs) regulators will be no longer able to identify some risks effectively, leading to an ineffective supervisory framework and, as a potential consequence, to a higher risk of financial instability. Source: CEBS: Expert Group on financial Information, IA COREP May 5th, 2009

20. Experiences: COREP • Implementing XBRL for a cross-border banking group in Europe COREP XBRL workflow Sharepoint Decentralised (If not under XBRL) Centralised Fermat CR worksheets CR worksheets CR worksheets CA-MR-OR worksheets XLS XLS XBRL tool Local Soft Assembling Assembling XBRL Local format CA-MR-OR worksheets Other regulator

21. Agenda • Implementing XBRL for a cross-border banking group in Europe FINancial REPorting Introduction What does XBRL mean for Dexia? Experiences COmon REPorting FINancial REPorting IFRS Taxonomy Conclusion

22. IFRS taxonomy FINREP taxonomy Pillar III taxonomy Dexia taxonomy Regulatory reporting (FINREP & Pillar III) Internal reporting Public Financial Statements Experiences • Implementing XBRL for a cross-border banking group in Europe Dexia’s different reportings direct filling Others Tax Other legal reporting (tax, statistical etc.) SEC Proposes Roadmap Toward Global Accounting Standards to Help Investors Compare Financial Information More Easily

23. Experiences: FINREP • Implementing XBRL for a cross-border banking group in Europe FINancial REPorting FINREP (FINancial REPorting) regulatory reporting based on IFRS and having its own taxonomy Same issue for FINREP than for COREP (but limited to specific parts) FINREP taxonomy is based on the IASCF taxonomy The link between both taxonomies to be stronger and stronger Link between the FINREP and our Financial Statements As per the examples that will follow, a large part of the required information is, if not similar, very close.

24. Experiences: FINREP • As such, we build up a comprehensive file with all the information required by all the regulators • No more need to input twice the same information • The information is always available for every reporting entity These principles should be applied at all levels of consolidation Implementing XBRL for a cross-border banking group in Europe FINREP: Basic principle “ The same information should be inserted only once “

25. Experiences: FINREP Implementing XBRL for a cross-border banking group in Europe FINREP: Basic principle Counterparties Mapping of the reportings and related ECB comments

26. Experiences: FINREP e.g. “public sector” "Non-commercial administrative bodies responsible to central governments, regional governments or local authorities, or authorities that in the view of the competent authorities exercise the same responsibilities as regional and local authorities, or non-commercial undertakings owned by central governments that have explicit guarantee arrangements, and may include self administered bodies governed by law that are under public supervision". Art 4 (18) of the CRD. Implementing XBRL for a cross-border banking group in Europe FINREP: Basic principle Common definitions Used for different reporting in different states like COREP and FINREP in Luxembourg and Belgium Like the Equity instruments Including statistical impairment in FINREP but not in COREP, currently too much discrepancies and different definitions. Need for harmonization.

27. Experiences: FINREP Links with FINREP (and F/S) Implementing XBRL for a cross-border banking group in Europe Example

28. Experiences: FINREP  Links with F/S (and FINREP), partly provided by RMG Implementing XBRL for a cross-border banking group in Europe Example

29. Experiences: FINREP Implementing XBRL for a cross-border banking group in Europe Example B/S  CEBS B/S  CB B/S

30. Experiences: FINREP • CSSF B/S Implementing XBRL for a cross-border banking group in Europe Example B/S

31. Experiences: FINREP • CBFA B/S Implementing XBRL for a cross-border banking group in Europe Example B/S

32. Experiences: FINREP •  link from F/S to FINREP Implementing XBRL for a cross-border banking group in Europe Example B/S

33. Experiences: FINREP • DEXIA’S B/S : link with magnitude accounts Implementing XBRL for a cross-border banking group in Europe Example B/S

34. Experiences: FINREP • Example 2: additional detail Implementing XBRL for a cross-border banking group in Europe Example B/S

35. Benchmarking ! Experiences: FINREP • Implementing XBRL for a cross-border banking group in Europe Comments on the discussion paper Discussion paper “Financial Statements Presentation” Not very suitable for the banking industry, like most of the IFRS, very oriented towards industrial companies. Should be more oriented towards a multi-tier service instead of only investor oriented. Very positive to impose a rigid classification as it improves comparability but this classification should reflect the realities of the different industries. We do not support presenting cash flows for the banking industry as it won’t add any value. We do believe that the use of a global standard like XBRL could reflect the specificities of our industry and furthermore increase comparability between and inside the different industries. We believe that the use of extensions and dimensions in XBRL will provide both the structure and the flexibility asked by the stakeholders.

36. Experiences: FINREP Implementing XBRL for a cross-border banking group in Europe FINREP Challenges Link with IFRS and banks’ financial statements • National discretions: • CEBS guidelines not always clear • CEBS guidelines not always respected by member states • Changes in the “business format” may have insidious impact on the taxonomy (deleting a line changes the definition of the total – unless “among which”) • Additional information inconsistent with the CEBS format • Sometimes, regulators may give interpretations to IFRS rules • Dimensions: • Preferred instead of tuples (link with IASCF?) • More standardization may be a benefit (exhaustive list of flows used throughout FINREP) • Definitions of some dimensions (counterparties => links with COREP, ECB, etc.)

37. Experiences: FINREP • Implementing XBRL for a cross-border banking group in Europe The Future: Using Dimensions ? As per our chart of accounts, clearly related

38. Agenda • Implementing XBRL for a cross-border banking group in Europe IFRS Taxonomy Introduction What does XBRL mean for Dexia? Experiences COmon REPorting FINancial REPorting IFRS Taxonomy Conclusion

39. IFRS Taxonomy Implementing XBRL for a cross-border banking group in Europe Main Structure of the IFRS taxonomy The Taxonomy is following rule by rule the IFRS requirements Ease to find an item and the related disclosures No problem to find out relative examples or description rules Clear follow up of the updates of the regulation. No difficulties to highlights impacts of IFRS changes

40. IFRS Taxonomy Implementing XBRL for a cross-border banking group in Europe IT viewpoint of the XBRL taxonomy

41. IFRS Taxonomy Implementing XBRL for a cross-border banking group in Europe Table Presentation of the taxonomy

42. IFRS taxonomy • Implementing XBRL for a cross-border banking group in Europe Summary of the main comments relating to IFRS taxonomy The issue of versioning has been raised by number of respondents Proposition to add formal descriptions of the concepts in order to avoid misunderstandings or divergent interpretations. Propositions to add extensions relating only to some industries or to propose different taxonomies for the different industries. Proposition to extend examples to all the possible situations, could be through dimensions, to allow other examples than the ones proposed by the IFRS wording. (Not all the reporting companies have biological assets…) Need to follow more the detail level required by the standards and the common practice. Need to translate the choices left to the reporting entities in the taxonomy (example: either in the notes or in the PFS) The use of the concept of “dimension” could help structure the information provided facilitating even more the understanding and the use of the provided information.

43. Agenda • Implementing XBRL for a cross-border banking group in Europe Conclusion Introduction What does XBRL mean for Dexia? Experiences COmon REPorting FINancial REPorting IFRS Taxonomy Conclusion

44. IFRS Taxonomy • Implementing XBRL for a cross-border banking group in Europe How does it work ? Data sources XBRL tool Accounting MAPPING Risk xls VALIDATION Tax XBRL conversion Others

45. Experiences : COREP • Implementing XBRL for a cross-border banking group in Europe Feedback On the softwares (XBRL focused) : Flexible enough to be adapted to all taxonomies To be adapted on a international banking IT structure Mapping is still the key Additional taxonomies can be quickly added On the taxonomies : Advantages of XBRL aren’t used Basis taxonomies are modified by local regulators A unique EU taxonomy is necessary XBRL is not mature enough to be internally used

46. Conclusion • Implementing XBRL for a cross-border banking group in Europe Launch of the XBRL reporting Detail of problems faced by a transnational bank implementing XBRL Different systems People are reluctant to change Information retention instead of global info sharing (protectionism attitude due, partly, to the crisis) Risk of national protectionism from the different branches Risk of additional national requirements => no additional requirements should be accepted, the member states should be ready to accept “as is” taxonomy as it is perfectly in line with IFRS requirements (and those should be accepted anywhere)

47. Experiences: FINREP Implementing XBRL for a cross-border banking group in Europe

48. Conclusion • Implementing XBRL for a cross-border banking group in Europe It’s just started but already running… Taxonomies need to be managed in an harmonized way i.e. Development of extensions has to be consistent with the “parent taxonomy” Need for Best Practices But XBRL standards are now strong enough to be industrialized More and more authorities are adopting XBRL, it is becoming the standard XBRL offers a great opportunity to complete the work done by the IASB and the IFRIC on IFRS principles, as now XBRL may help to better compare information coming from different companies Furthermore, the use of XBRL does not require huge investments as most of the software are open-source

49. Implementing XBRL for a cross-border banking group in Europe Questions ? THANKS FOR YOUR ATTENTION Contacts Giancarlo Pellizzari Head of Prudential Policy +32 22 13 50 49 giancarlo.pellizzari@dexia.com

50. Implementing XBRL for a cross-border banking group in Europe Giancarlo Pellizzari Head of Prudential Policy Dexia Group Paris, June 22nd to 25th, 2009