Implementing Technical Standards on Disclosure for Own Funds

Adopted and published on the Official Journal

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. 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 of the regulatory adjustments and a template describing the main features of an institution’s capital instruments.

Documents

Final draft Technical Standards

Links

Press Release

EBA publishes first final draft technical standards on own funds

26 July 2013

The European Banking Authority (EBA) published today its final draft Implementing Technical Standards (ITS) on own funds. These final draft ITS will be part of the Single Rulebook aimed at enhancing regulatory harmonisation in the banking sector in Europe and namely at strengthening the quality of capital.

These ITS on disclosure for own funds focus on disclosure requirements and aim at increasing transparency on regulatory capital held by European institutions.

Legal basis and next steps

These final RTS and ITS have been developed in accordance with Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (colloquially known as Capital Requirements Regulation or CRR).

The final standards have been sent today to the European Commission for their adoption as EU Regulations that will be directly applicable throughout the EU.

EBA publishes first final draft technical standards on own funds and credit risk adjustment

26 July 2013

The European Banking Authority (EBA) published today its final draft Regulatory Technical Standards (RTS) and final draft Implementing Technical Standards (ITS) on own funds, as well as its final draft RTS on credit risk adjustment (CRA). These final draft RTS and ITS will be part of the Single Rulebook aimed at enhancing regulatory harmonisation in the banking sector in Europe and namely at strengthening the quality of capital.

RTS and ITS on own funds

These draft final RTS and ITS cover different areas of own funds. In particular, the RTS on own funds part I specify the different elements of own funds, including: Common Equity Tier 1 (CET1) capital, Additional Tier 1 capital, Tier 2 capital, deductions from the different types of capital, and transitional provisions for own funds in terms of grandfathering. The RTS on Gain on Sale specify further the concept and the treatment of a gain on sale, defined as any increase (or part of an increase) in equity under the applicable accounting framework arising from future margin income in the context of a securitisation transaction. The RTS on own funds part II specify the conditions under which competent authorities may determine that a type of undertaking recognised under applicable national law qualifies as a mutual, cooperative society, savings institution or similar institution for the purpose of calculating own funds. Finally, the ITS on disclosure for own funds focus on disclosure requirements and aim at increasing transparency on regulatory capital held by European institutions.

RTS on credit risk adjustment

These draft final RTS specify the calculation of specific and general credit risk adjustments to determine own funds requirements for credit risk. For this reason, the required calculation is limited to the amounts of credit risk adjustments that both reflect losses exclusively related to credit risk and reduce the institution's Core Equity Tier 1 (CET1) capital. In particular, these RTS foresee that any relevant credit risk adjustment must be calculated either under General Credit Risk Adjustments or Specific Credit Risk Adjustments. Relevant criteria for this calculation are also provided and, in order to facilitate the work of institutions in applying them, the RTS elaborate further on some specific cases.

Legal basis and next steps

The final standards have been sent today to the European Commission for their adoption as EU Regulations that will be directly applicable throughout the EU.

Consultation Papers

Consultation on draft Implementing Technical Standards (ITS) on Disclosure for Own Funds (EBA/CP/2012/04)

Summary 07/06/2012

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.

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.