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Irish Bankers Federation Response to CEBS Consultation Paper (CP05) on Supervisory Disclosure Framework Summary

1. Introduction

The Irish Bankers Federation (IBF) welcomes the CEBS proposal for a common European framework for supervisory disclosure. They are satisfied that the framework aligns with the requirements of Article 144 of the proposed Capital Requirements Directive (CRD) and the European Banking Federation's (EBF) earlier submission. While IBF supports the goal of promoting transparency in supervisory practices, they emphasize that the primary objective of the framework should be supervisory convergence and the promotion of a level playing field across Europe.

2. Specific Comments

2.1 Basic Principles

• Principle 1: The framework should focus on recording and transmitting factual information without interpretation or validation.

  • IBF suggests that validation is necessary to ensure comparability and recommends that CEBS should be responsible for this process.

• Principle 2: Information on the CEBS website will be in English, with non-English speaking countries providing information in English on a best-efforts basis.

  • This is welcomed by IBF.

• Principle 4: The framework should be resource-efficient and avoid placing excessive burdens on supervisors or institutions.

  • IBF supports the commitment to use currently available information and no additional reporting requirements.
  • They stress that the reporting requirements of institutions must not increase as a result of the framework.

• Principle 5: The framework should be regularly monitored by CEBS, with an annual report provided to the European Commission.

  • IBF requests clarity on whether users will be consulted in this process, as user feedback is crucial for assessing the framework's effectiveness.
  • They believe that annual reviews are insufficient in the early stages and advocate for ongoing feedback and timely amendments.

2.2 Content of Disclosure

• CEBS is considering requiring national authorities to disclose lists or general criteria for risk-weighted entities, including governments, public-sector entities, and core market participants.

  • IBF supports the disclosure of both lists and criteria to achieve supervisory convergence.

• IBF suggests that supervisors should explain the rationale behind the implementation of certain options, especially in the context of national discretions, to promote transparency and consistency.

• A table in the Statistical Data Section requires supervisors to disclose credit risk exposures as a percentage of risk-weighted assets.

  • IBF notes that this classification aligns with the IRB approach but may not be suitable for institutions using the Standardised Approach, which could lead to difficulty in assigning exposures.

2.3 Implementation & Updating

• CEBS plans to finalize the implementation guidelines by year-end 2005, but implementation is likely to be delayed.

  • IBF acknowledges the uncertainty due to the CRD not being finalized but recommends that if the CRD is finalized earlier, an implementation date should be proposed.

• Competent authorities are expected to update disclosures at least once a year.

  • IBF recommends quarterly assessments of data accuracy and public confirmation of these assessments on the website to maintain the framework's value.

3. Comments to Questions

Question 1

• IBF acknowledges the website demonstration as user-friendly but notes that it is difficult to assess its effectiveness until the framework is operational.
• They stress the importance of ongoing user feedback and timely improvements to the framework.

Question 2

• IBF supports the principle of confidentiality regarding supervisory decisions on specific institutions.
• However, they suggest that a high-level overview of reasons for non-acceptance of advanced approach applications should be disclosed to ensure consistency in regulatory approaches across the EU.

Question 3

• IBF highlights the value of the framework in enabling efficient comparison of regulatory approaches among EU member states.
• Their members intend to use the framework to examine legislative implementation, model validation, and national discretions.
• Statistical data on credit and operational risk approaches is of particular interest to banks.

Question 4

• IBF supports CEBS's use of the internet for disclosure and finds the demonstration user-friendly.
• They recommend that the information should also be available in Excel format to facilitate internal processing by banks.