EBA欧洲银行-report-on-regulatory-implementation-of-Pillar-3_20页_387kb

Summary of the Report on Regulatory Implementation of Pillar 3

Key Findings

The report provides an overview of the regulatory implementation of Pillar 3 under Directive 2006/48/EC, focusing on the challenges and considerations raised by CEBS members and industry participants. It highlights the following core content, main views, and key issues:

Core Content

• Pillar 3 aims to enhance market discipline by requiring credit institutions to disclose relevant information to the market.
• The implementation of Pillar 3 has been a growing focus, especially with the increasing emphasis on transparency and market-based supervision.
• CEBS conducted a survey to assess how member states have implemented the disclosure provisions of the Directive, particularly those related to Article 72.
• The report also discusses the relationship between Pillar 3 and accounting disclosures, as well as other aspects such as disclosure policy, frequency of disclosure, and medium and verification methods.

Main Views

• Supervisory approaches vary significantly across member states, especially regarding the scope of application of Pillar 3 disclosure requirements.
• Industry concerns include the complexity and cost of Pillar 3 disclosures, and the potential for misinterpretation by market participants.
• There is a preference for a non-prescriptive approach from supervisors, allowing banks to determine the most appropriate means of disclosure and verification.
• Coordination with other supervisory bodies such as the Basel Committee is considered essential for developing good practices and harmonizing market discipline mechanisms.

Key Issues

• Scope of Application: Some countries apply Pillar 3 requirements to all entities, including subsidiaries, which raises concerns about the burden on local stakeholders.
• Disclosure Policy: Most countries do not provide detailed supervisory guidance on disclosure policy structure and content.
• Materiality and Confidentiality: Supervisors generally do not impose specific criteria on materiality or proprietary/confidential information, though some consider case-by-case guidance.
• Frequency of Disclosure: While the minimum is annual, some countries require more frequent disclosures, especially for institutions with advanced risk methodologies or public listings.
• Medium and Verification: Supervisors vary in their approach to the medium and location of disclosures, and few require specific verification methods beyond statutory audit.
• Relationship with Accounting Disclosures: There is a need for consistency between Pillar 3 and IFRS 7 disclosures, though no major supervisory action is currently planned.

Scope for Follow-Up Work

CEBS has identified the following areas for further investigation and possible follow-up:

• Application of Articles 72.1 and 72.2: CEBS will explore a compromise solution that allows for limited disclosure in the financial statements of subsidiaries, balancing the needs of supervisors and the industry.
• Coordination with Industry Efforts: CEBS proposes to wait for the outcomes of industry-led initiatives on Pillar 3 disclosures before considering further regulatory measures.
• Good Practices Paper: Future work may include the development of a good practices paper to support harmonized market practices in Pillar 3 disclosure.

Main Concerns and Industry Feedback

• The industry (represented by EBF) has raised concerns about the complexity and cost of Pillar 3 disclosures, especially for local stakeholders.
• Some supervisors argue that more information is needed for local market participants, especially for significant subsidiaries of EU parent institutions.
• The workshop held on 7 December 2007 allowed for industry input on practical challenges and provided a platform for aligning views between CEBS and the banking sector.
• There is a need for further education of market participants to avoid misinterpretation of Pillar 3 data.

Conclusion

CEBS concludes that while the implementation of Pillar 3 has been largely consistent with the Directive, there are areas that require further clarification or coordination. The follow-up work will focus on finding a practical solution for subsidiaries and ensuring alignment between Pillar 3 and accounting disclosures. No immediate regulatory action is deemed necessary, as the current issues are considered less pressing compared to other areas of implementation.