1

Diretoria de Fiscalização

Departamento de Supervisão Indireta

The Central Bank of Brazil’s The Central Bank of Brazil’s

New Credit Information System (SCR)New Credit Information System (SCR)

World Bank Finance Forum 2004World Bank Finance Forum 2004

22-24/September/200422-24/September/2004

2

Project Initiation Background

Regulation

Better assessment of financial institutions’ economic capital

Supervisory Function

Information

Improved availability of credit risk data for market participants

“Credit Bureau”Function

Dramatic increase in demand for credit

Information (internal & external)

Need to Adapt to new Basel requirements

Policy drive to reduce intermediation spreads & improve access to

finance

3

Technical Factsheet

Number of Financial Institutions Participating 1,400

Types of Files Sent 4

Number of Quality Control Checks more than 300

Database Size Number of Files 1 trillion

Projected Database Size (in 14 months) 300Gb

Number of Menus (screens) 800

Number of Lines of Software Code 120,000

Number of Business Rules 500

Number of Alternative Flows 400

4

System ArchitectureSystem Architecture

Dat

a in

put

Data Data WarehouseWarehouse(DW)(DW)

DocDoc30830822

Sistema SCR

BD BD OperationaOperationall

Data input

OutroOutross

UnicaUnicadd

SRFSRFDocuments entered into the system :Doc 3030Doc 3020Doc 3026

BD BD ControlControl

Report

Qua

lity

Con

trol

P

roce

dure

s

Institu

tion

s Cen

tral B

an

k

5

• Summary of all operations, including those reported in detail in Form 3020

• Aggregated by:• Type of operation• Risk rating of the operation • Value of the operation • Type of client

• Reported in aggregate: • Distribution of maturities• Number of operations• Number of clients• Provisioning levels

• Localização• Origem dos recursos• Vinculação à Moeda Estrangeira

• etc

Form 3030 – Aggregate Data

6

Form 3020 – Individual Data

• Consolidated Operations (loans below R$ 5,000)

• Type of operation

• Risk classification

• Exchange rate variation

• Number of operations

• Distribution of maturities

• etc.

• Individual Operations (loans equal or greater to R$ 5,000 = US$ 1,720)

• Contract number• Type of operation• Origen of funds lent• Indexed interest rate • Annual effective interest rate• Risk classification• CEP (zip code)• Date loan was initiated• Date of maturity• Guarantees (all)• Guarantors (all)• Distribution of maturities• Etc.

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• Clients requested by the Central Bank

• Balance Sheet Data

• Data from Ratings Agencies

Cadastral Information is requested for all companies belonging to the same group as perceived by lenders, regardless of whether they are all clients of that financial institution. The information provided by individual financial institutions is then consolidated by the supervisors to map the group structure and assess its risk profile.

Form 3026 – Complementary Data

• Relevant Clients (Operations in excess of

R$ 5 million (US$ 1.72 million)

• Corporate Group / Holding Structure

• Identification

• Principles

8

Feedback to Financial Institutions

1122

......

100.000100.000

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......

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100,000 100,000 clientsclients

30,000 30,000 authorizationsauthorizations

30823082

30,000 clients with 30,000 clients with consolidated consolidated informationinformation

30203020

Option 1: Web access for

individual queries

Option 2: Consolidated information

at portfolio level

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Example of Data Display (1)

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Example of Data Display (2)

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Example of Data Display (3)

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Examples of Use of SCR Data in Banking Supervision

• Transition Matrix

• Profiles of Credit Portfolios

• Analysis of Borrowers

• Systemic Oversight of Credit Market

• Credit Analysis by institution or in aggregate (economic sector, geographic distribution of credit, distribution by value, etc)

• Stress Testing

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Example of Transition Matrix

IF: SFN - SFNR$ Millions

Active Total

Portfolio (% )

RISK AA A B C D E F G H Prej. Reduç. Dec-02

AA 69.9% 4.3% 1.8% 0.4% 0.2% 0.1% 0.1% 0.1% 0.2% 0.0% 22.9% 177,995 43.0%

A 6.8% 41.0% 7.1% 3.1% 1.2% 0.5% 0.3% 0.3% 1.1% 0.1% 38.6% 104,777 25.3%

B 8.5% 11.7% 34.5% 7.9% 2.1% 0.7% 0.5% 0.4% 2.9% 0.5% 30.4% 57,251 13.8%

C 2.2% 9.6% 12.0% 33.2% 5.8% 1.6% 0.8% 0.7% 2.8% 1.3% 30.0% 33,136 8.0%

D 1.0% 10.9% 6.0% 11.1% 30.6% 3.3% 2.3% 1.5% 7.1% 3.9% 22.4% 13,442 3.2%

E 0.5% 0.9% 0.7% 2.9% 2.5% 30.8% 2.0% 1.0% 21.7% 11.0% 26.0% 11,296 2.7%

F 2.1% 2.4% 1.4% 1.1% 1.6% 2.3% 37.9% 2.2% 11.9% 23.8% 13.4% 3,655 0.9%

G 1.9% 1.3% 4.0% 1.3% 1.3% 1.1% 1.1% 42.7% 8.5% 23.4% 13.4% 3,500 0.8%

H 0.5% 1.3% 0.9% 0.9% 1.1% 0.6% 0.6% 1.1% 27.7% 51.5% 13.8% 8,718 2.1%

Active

Portfolio 137,622 62,255 35,535 21,512 9,330 5,676 2,971 2,852 10,612 8,795 116,608 413,768

Dec-03

Total % 33.3% 15.0% 8.6% 5.2% 2.3% 1.4% 0.7% 0.7% 2.7% 2.1% 28.2%

Portfolio Identified Dec/aa 88.95%

Average Initial Provisioning Dec/aa 4.8%

Average Final Provisioning Dec/aa 6.6%

Discrepancy in Provisioning Levels 1.79

Dec-03

Dec

-02