Submission #13

Methodist Chapel AId Ltd

Question 11: Do respondents consider that the methodology proposed for the LCR disclosure template is, from a practical point of view, operationally feasible meaning that the accuracy of the daily reporting observations for the calculation of the averages can be ensured? Do respondents consider that this operational feasibility could depend on the size of the credit institution or could be different in the case of solo or consolidated data?

We would urge the consideration of proportionality and the use of monthly average figures rather than daily average for smaller institutions. For a very small privately owned bank such as ourselves (total assets £30 million) funded by accumumated reserves and retail deposits (i.e. no wholesale borrowing or use of central government facilities) with a simple business model and a stable LCR in excess of 1000%, the benefit of the daily average calculation seems minimal in comparison to the administrative burden caused.

We are expected by our regulator (the PRA) to be able to report LCR information on a daily basis in a stress. This is achievable even with our very small staff (5 staff members). However, doing this additional work every day even in non-stress situations will use a large part of our small staff resource (estimated 25% of our total daily resource) for little benefit and will lead to less resources available for other requirements or a significant increase to our cost base. Therefore we believe that this proposal as stated clearly affects very small banks on a very disproportionate way indeed.

Question 14: Do respondents think that the opportunity of having a simplified disclosure template for smaller credit institutions should be assessed? This simplified LCR disclosure template could comprise for example the ratio itself, the numerator and the denominator as key ratios and figures of the LCR, in the sense of Article 435 (1) (f) CRR. What arguments could respondents provide to justify that the LCR ratio itself, its numerator and its denominator are the only key ratios and figures of the LCR which are required to be disclosed by smaller credit institutions? More generally please provide any argument in favor or against a simplified template, and if you believe a simplified template for LCR disclosures is relevant, please indicate which type of information you would like to have disclosed in that template. What specific criteria would respondents suggest to identify those smaller institutions for which a simplified disclosure template could potentially be disclosed?

As stated in our response to question 11, would urge the consideration of proportionality and the use of monthly average figures rather than daily average for smaller institutions.

In addition we would urge the use of a reduced disclosure framework e.g. the LCR ratio itself, its numerator and its denominator.

For institutions such as ourselves e.g.

no wholesale borrowing
less than €50 million assets
privately owned
funded by accumulated reserves and retail deposits
not part of a group
less than 3500 deposit accounts
no use of central government facilities
stable business model
LCR in excess of 1000%
Operating in one country only

there is little reason to justify disclosing additional information, given that the only likely interested party would be the regulator. This information is reported to the regulator in any case. The cost of producing any additional disclosure in such an instance clearly massively outweighs the benefit and risks making the disclosure document very lengthy and impenetrable to the average retail depositor.

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Name of organisation Methodist Chapel AId Ltd