Consultation on Draft Implementing Technical Standards on Disclosure for Own Funds

The European Banking Authority (EBA) launched today a consultation on Draft Implementing Technical Standards (ITS) on disclosure for own funds. These draft ITS complement the first set of standards on own funds published last April and focus on the disclosure requirements to be met by institutions.  Establishing appropriate disclosure requirements increases the transparency on regulatory capital held by European institutions and ultimately contributes to strengthening its quality and quantity. The consultation runs until 31 July 2012.

These technical standards aim at ensuring a uniform approach to disclosure for own funds by institutions and across jurisdictions in order to allow detailed assessments of banks' capital positions and to make cross-jurisdictional comparisons.

Main features of the ITS

To facilitate international comparisons and to avoid the development of two different disclosure frameworks, the draft ITS follow very closely the approach adopted by the Basel Committee on Banking Supervision (BCBS), while making appropriate reference to the EU regulatory framework (Capital Requirements Regulation - CRR). The EBA also ensured that these ITS are consistent with the COREP framework.

The requirements contained in the draft ITS are directed at institutions which are requested to complete three sets of templates:

• a general own funds disclosure template reflecting the capital position of institutions;
• a transitional disclosure template covering the phasing in (from 1 January 2013 to 31 December 2017) of the regulatory adjustments – namely with reference to deductions and filters - and reflecting the transitional provisions implemented by the institutions;
• a template describing the main features of an institution's capital instruments.

In addition to the three templates, institutions are required to provide a balance sheet reconciliation between their financial statements and their regulatory own funds to address the disparities between these two sets of data.

Next steps

The present draft ITS are produced in accordance with Article 15 of the EBA Regulation and will be finalised according to the final version of the CRR/CRDIV proposals before submitting them to the European Commission.

In finalising these ITS, the EBA will also to take into account, as far as necessary, the international developments in the field of disclosure on own funds and in particular the final guidance to be published by the BCBS.

Further consultation papers on the remaining RTS on own funds in the CRR are expected to be published later in 2012.

Consultation process

Comments on this paper can be sent to the EBA by e-mail to CP-2012-4@eba.europa.eu by 31 July 2012, indicating the reference EBA/CP/2012/04.

All contributions received will be published unless you request otherwise.

Notes to editors

(1) In December 2011, the (BCBS) published a consultative document on ‘Definition of capital – Disclosure requirements' aiming at addressing the lessons from the financial crisis and, in particular, the criticism that the lack of clarity on the quality of capital contributed to uncertainty during the financial crisis.

(2) The CRR/CRD IV package (the so-called Capital Requirements Regulation - ‘CRR'- and the so-called Capital Requirements Directive – ‘CRD') sets out prudential requirements which are expected to be applicable as of 1 January 2013. The package translates in European law international standards on bank capital agreed at the G20 level (most commonly known as the Basel III agreement). One of the major achievements will be the creation of a Single Rule Book - a set of rules directly applicable in all EU member states - that will improve both transparency and enforcement in the EU banking sector. 

(3) Draft RTS are produced in accordance with Article 10 of the EBA regulation and must be subsequently endorsed by the European Commission (EC). They shall be adopted by the EC by means of regulations or decisions. According to EU law, EU regulations are binding in their entirety and directly applicable in all Member States. This means that, on the date of their entry into force, they become part of the national law of the Member States and their implementation into national law is not only unnecessary but also prohibited by EU law, except in so far as this is expressly required by them.