EBA欧洲银行-FinalReportonregulatoryimplementationofPillar3_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 disclosure requirements across EU member states, based on a survey conducted by CEBS.
• The survey focuses on how CEBS members have implemented Chapter 5 of Directive 2006/48/EC, particularly the disclosure by credit institutions.
• The most critical issues identified are:
  • The scope of application of Pillar 3 disclosure requirements, especially with regard to significant subsidiaries.
  • The relationship between accounting disclosures and Pillar 3.
• Other issues, such as frequency of disclosure, appropriate medium and location, and verification methods, have not raised major concerns and are not expected to require significant supervisory action at this time.
• CEBS proposes follow-up work in 2008 to explore a compromise solution for the disclosure of subsidiaries, particularly in terms of limited disclosure alongside individual financial statements.
• CEBS also suggests that a good practices paper on Pillar 3 could be developed in the future, in coordination with other supervisory bodies like the Basel Committee.

Core Content

The report outlines the implementation of Pillar 3 under Directive 2006/48/EC, with a focus on the scope of application, disclosure policy, and other related issues. It emphasizes that while the directive sets out general requirements, the national transposition and supervisory interpretation have led to differences across countries.

III.1. Scope of Application of Pillar 3 Disclosure Requirements (Article 72)

• Article 72.1 and 2 require EU parent credit institutions and financial holding companies to disclose information at the consolidated level.
• Significant subsidiaries are also required to disclose information about own funds and capital requirements.
• Differences in implementation exist:
  • 23 countries apply limited disclosure to subsidiaries.
  • 4 countries require full disclosure from all entities, including subsidiaries.
• Some countries argue that the current disclosure requirements are broader than those in the Directive, and that applying it strictly would be detrimental to domestic markets.
• The industry (EBF) is concerned that the disclosure is too complex and that stakeholders like depositors and investors may not benefit from detailed subsidiary-level disclosures.
• A compromise solution is being explored, where limited disclosure could be provided alongside individual financial statements of subsidiaries.

III.1.b) Application of Article 72.3

• Article 72.3 allows for a waiver of disclosure requirements if the institution is included in comparable disclosures by a parent entity in a third country.
• 17 countries use this waiver, while 12 countries do not.
• The 12 countries that do not apply the waiver are the same as those that require full or limited disclosure from all entities.
• No major concerns were raised by the European banking industry regarding this issue.

III.2. Disclosure Policy and General Concepts

• Article 145.3 of the Directive requires credit institutions to adopt a formal disclosure policy.
• Most countries do not provide supervisory guidance on the structure or content of the policy.
• 12 countries require the submission of the disclosure policy to supervisors, while 6 countries require its publication.
• 11 countries see the disclosure policy as a separate issue from the recognition of internal methodologies.
• The link between disclosure policy and internal methodologies is a topic of discussion, but not a major concern.
• Materiality and proprietary/confidential information are not subject to specific supervisory criteria in most countries.

IV. Other Issues

• Frequency of disclosure is set at annual basis, but some countries require more frequent publication.
• Medium, location, and verification of disclosures are left to the discretion of institutions, with 15 countries not prescribing specific means.
• External auditors are required in 5 countries to verify Pillar 3 disclosures, while internal auditors are required in 2.
• The industry expresses concerns about the audit burden and inconsistencies between accounting and Pillar 3 disclosures.
• Standardised formats, prudential reporting, and proportionality are areas of potential divergence, but not major concerns.

V. Scope for Possible Follow-Up Work

• CEBS will further investigate the potential for limited disclosure in subsidiaries.
• The relationship between accounting and Pillar 3 is a key area of focus, with a possible good practices paper being developed.
• CEBS will cooperate with the industry and supervisory authorities to address these issues.
• Follow-up work is expected to be completed by 2008.

Main Points

• Pillar 3 is seen as an important tool for market discipline, but its implementation is complex and varied across EU member states.
• The scope of application of Pillar 3 disclosure requirements is a major area of concern, particularly regarding subsidiaries.
• The relationship between accounting and Pillar 3 disclosures is critical and needs to be aligned to avoid inconsistencies.
• Supervisory guidance is limited in most countries, with a preference for non-prescriptive approaches.
• The industry prefers web-based solutions for disclosures and is concerned about increased costs and over-regulation.

Conclusion

The report highlights the divergence in the implementation of Pillar 3 across EU member states, particularly in relation to subsidiaries and the relationship with accounting disclosures. While supervisory intervention is generally limited, CEBS is proposing follow-up work to address these concerns and enhance market discipline. The industry is involved in the process, and cooperation is expected to lead to practical solutions.