EBA欧洲银行-FinalReport_SummaryofPillar3ws_Dec2007_6页_188kb

Summary of the Workshop on the Implementation of Pillar 3

Core Content

The workshop on the implementation of Pillar 3, held on 7 December 2007 by CEBS' Expert Group on Financial Information (EGFI), aimed to discuss the findings of a survey on how EEA countries implement the disclosure requirements under Directive 2006/48/EC. It also sought input from industry and market participants on challenges and concerns related to Pillar 3 disclosures.

Main Aim

• To analyze the regulatory implementation of Pillar 3 across EEA countries.
• To gather feedback from industry and stakeholders on the practical challenges and concerns related to Pillar 3 disclosures.

Workshop Structure

Morning Session

• Participants: National supervisory authorities, banks, trade associations, rating agencies, and the European Central Bank (ECB).
• CEBS Presentation: Arnoud Vossen outlined CEBS' efforts in 2007, including a survey, report preparation, and stakeholder consultations.
• Report Findings:
  • Significant Subsidiaries: Most countries require limited disclosure from significant subsidiaries, with differences in how they are defined.
  • Disclosure Policy: Varying approaches in terms of publication requirements, prescriptiveness, materiality, and confidentiality were noted, but no major concerns were raised.
  • Other Issues: Concerns were raised about verification and frequency of disclosures, but most countries adhere to the CRD provisions.

Key Recommendations

• CEBS proposed limited extra disclosures for subsidiaries, along with their financial statements, to improve clarity and comparability.
• A follow-up debate on the relationship between Pillar 3 and accounting disclosures was suggested.
• The report was welcomed by participants, and there was a suggestion to include guidance on disclosure timing and identify national approaches for cross-border firms.

Industry Perspective (Jonathan Gray, Royal Bank of Scotland)

• Challenges: Confusion among market participants, differences in disclosure timing and scope, and the need for reconciliation of data.
• IFRS Relationship: Highlighted differences between Pillar 3 and IFRS, especially in terms of equity treatment and definitions of past due, provisions, and impairment.
• Communication Strategy: Emphasized the need for a strategy involving supervisors to educate stakeholders before, during, and after the implementation of Pillar 3.

Rating Agency Perspective (Bernard de Longevialle and Nick Hill, Standard & Poor's)

• Approach: S&P will use a base case and specific case methodology for assessments.
• Data Comparability: Plans to adjust Basel II parameters and build internal databases with Pillar 3 information.
• Concerns: Risk of confusion if alternative capital measures are introduced, and the need for more detailed disclosures (e.g., by exposure class, geography, sector).

Afternoon Session

Three topics were selected for break-out discussions:

1. Disclosures of Significant Subsidiaries

• Stakeholder Focus: Stakeholders generally focus on the parent company rather than the subsidiary.
• Practical Concerns: Subsidiaries may use different methodologies than the parent, leading to potential misinterpretation.
• Proposed Solution: Disclose information at the parent level, while allowing local stakeholders access to subsidiary data.

2. Content of Current Pillar 3 Disclosures

• Mixed Reactions: Participants felt little room for modification, but suggested using a balanced level of detail and providing explanations for concepts used.
• Alignment with Accounting: Acknowledged differences in consolidation and valuation methods, but agreed that financial statement disclosures are equivalent to Pillar 3 requirements.
• Market Context: Pillar 3 is not designed for stress situations, but transparency is seen as beneficial for market confidence.

3. Education of Market Participants

• Classification of Stakeholders: Different strategies are needed for professional users and general public.
• Communication Strategy: Workshops and conferences for institutional investors, newsletters for the press.
• Collaboration: Encouraged joint strategies between the industry and supervisors to improve understanding and confidence.

Conclusion

• The workshop was considered very helpful for the implementation of Pillar 3 in the EU.
• Further discussions involving the industry, Pillar 3 users, and supervisory authorities are planned for 2008 as part of Basel II and CRD implementation.
• CEBS aims to work collaboratively with stakeholders to address concerns and improve the effectiveness of Pillar 3 disclosures.