In the context of a post-merger integration in the banking sector, the interim manager was entrusted with a mandate for the tax-compliant historicization of sold retail data. Prior to the assignment, he had already reviewed and commented on the migration concept submitted by the buyer on behalf of the chief representative.
SEB AG, one of the leading Northern European banking groups, had decided to sell its retail business for the German market to one of the largest banks in the world. SEB serves 4 million private customers, 400,000 small and medium-sized enterprises, 2,600 large companies and institutions in Europe. The bank employs around 17,000 people internationally and operates 375 branches. The Group operates in 20 countries worldwide.
The buyer operates almost 15,000 branches for more than 102 million customers in more than 40 countries. Of these, 7 million customers are served in 340 stores in Germany. It was agreed with the buyer that it would own all the data associated with the object of sale.
Due to the complexity of the issue, the interim manager worked with a team of 28 senior business analysts in total.
Complex data law requirements to be met
Companies must make data that must be retained for tax purposes available for tax audits at all times in a fully searchable, retrograde manner. The legal basis for this is the German Fiscal Code, until 2015 the GDPdU (principles for data access and verifiability of digital documents) and since 2015 the GoBD (principles for the proper keeping and storage of books, records and documents in electronic form and for data access). Last but not least, the European General Data Protection Regulation also requires data that is no longer required to be deleted immediately. For foreign companies in particular, it is a major challenge that the tax authorities require all system documentation and procedural instructions to be in German.
In the event of a breach of the retention obligation, there is a risk of disallowance of the correctness of the bookkeeping, tax assessment and liability of the entire management board. In the event of deliberate deletion of data subject to retention, the German Criminal Code even applies.
As a consequence, when a system is replaced or a company is sold, the data subject to retention must be transferred unchanged to an archive system or another system. If this is not feasible, the legacy application must be available for use until the end of the retention obligation. With today's data processing lifecycles, this is either impossible in practice or only feasible at very high cost.
Adding to the problem is the fact that document management systems are generally only used for archiving documents and lists and are therefore not tax-compliant.
Defining the optimal historization strategy
The interim manager and his teams initially evaluated 560 applications from SEB's portfolio to determine which data should be archived and how, based on which legal basis. Data requiring retention was identified for 93 applications and assigned to the project. The applications had been continuously developed over the course of their life cycle and formed completely heterogeneous structures. This applied to the client servers, the medium data technology (e.g. AS 400) as well as in the IBM mainframe environment (including EBCDIC flat files).
In order to define the optimal historization strategy, the interim manager defined key performance indicators (KPIs). He analyzed various historization approaches and coordinated the evaluation between the two companies. He then drew up the service level agreement with his technical partner and agreed it between the two companies and the law firm of the selling bank.
After legal assessment, adaptation and amendment of the document to the parameters of the deal by the law firm, it was then signed by both companies and served as a binding basis for the project.
Historization results transferred to the buyer bank's archive system
For efficient and standardized implementation, the project team chose an industrialization approach for the historization process, with which the tasks were implemented in parallel. The auditor software IDEA was used for quality assurance.
The historization results were transferred to the buyer bank's archive system and processed further without further processing. The error rate was 0.01 percent in relation to the number of applications in scope.
Compliance regulations fully met
Despite the very ambitious project plan, all targets were achieved in terms of quality and quantity within the specified time frame. Both PwC on the SEB side and Deloitte on the buyer bank side have confirmed that the procedure meets the requirements of the compliance regulations.
