Summary Wed, 06/24/2020 - 17:48
- The disclosure ITS implement the new requirements introduced by CRR2 and aims to reinforce market discipline by increasing consistency and comparability of institutions' public disclosures.
- The updated reporting framework reflects changes in the CRR and introduces new reporting requirements on net stable funding ratio and counterparty credit risk.
- New proportionality measures have been implemented, in particular for small and non-complex institutions.
The European Banking Authority (EBA) published today new Implementing Technical Standards (ITS) on public disclosures by institutions and revised final draft ITS on supervisory reporting that implements changes introduced in the revised Capital Requirements Regulation (CRR2) and the Prudential Backstop Regulation. The publication of the two ITS is a major step forward towards promoting market discipline through enhanced and comparable public disclosures for stakeholders, and towards keeping the reporting requirements in line with the evolving needs for Supervisory Authorities' risk assessments.
CRR2 implements a number of key measures such as net stable funding ratio, leverage ratio and large exposures and introduces new disclosure requirements for institutions on all prudential topics. These comprehensive disclosure and reporting ITS are released in the context of the EBA Roadmaps on the Risk Reduction Package on disclosures and on supervisory reporting.
The disclosure ITS optimise the Pillar 3 policy framework for credit institutions by providing a single overarching package that brings together all previous pieces of regulation and incorporates all prudential disclosures, thus facilitating implementation by institutions and improving clarity for users of such information. The ITS implement the disclosures in a way to ensure that market participants have sufficient and comparable information to assess the risk profiles of institutions, in line with the Basel Committee’s Pillar 3 standards and with the increased standardisation of institutions' public disclosures. This reinforces the ultimate objective of market discipline. The CRR2 definitions for ‘small and less complex institutions’ and ‘large institutions’ support proportionality of Pillar 3 disclosures. In addition, the ITS include thresholds to trigger additional disclosures for large banks based on their risk profiles.
The reporting ITS reflect the changes brought in by the CRR2 and the Prudential Backstop Regulation and include new reporting requirements on counterparty credit risk and net stable funding ratio, non-performing exposures minimum coverage and changes to different areas of reporting, including own funds, credit risk, large exposures, leverage ratio, FINREP and G-SII indicators.
These ITS include several proportionality measures, including simplified net stable funding ratio reporting for small and non-complex institutions. These ITS are designed to replace the Commission's Implementing Regulation (EU) No 680/2014 and they have been used as an opportunity to improve the consistency between the reporting and disclosure requirements, with a view to facilitate institutions' compliance with both requirements.
Implementation and remittance date
The first disclosure and reporting reference dates will be 30 June 2021.
Legal basis and next steps
The ITS on disclosure have been developed in accordance with the mandate included in Article 434a of Regulation (EU) N0 575/2013.
The ITS on supervisory reporting have been developed in accordance with the mandate included in Article 430 of Regulation (EU) N0 575/2013. These final draft ITS replace the Regulation (EU) No 680/2014.
The publication of the corresponding reporting technical package, including the Data Point Model (DPM), validation rules and XBRL taxonomy, is expected by the end of the Summer 2020.
The two ITS have been developed fostering consistency of quantitative data, and a revised version of the mapping between disclosure and reporting will be provided in order to facilitate compliance by institutions and to improve the quality of the information disclosed. Both of these final draft ITS were submitted to the European Commission for adoption.