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FBE Summary on CEBS Consultation Paper CP05

Core Content

The European Banking Federation (FBE) has responded positively to the CEBS Consultation Paper CP05, which outlines a framework for supervisory disclosure in the European Union. The FBE appreciates the comprehensive and structured nature of the framework and its potential to facilitate a comparison of supervisory models and methods across EU Member States.

Main Views

• Support for the Framework: The FBE supports the CEBS approach of making supervisory disclosures accessible via the internet and highlights the usefulness of the demonstration website as a practical example.
• Need for Transparency and Comparability: Transparency is seen as essential, but it can only be achieved if the data is comparable. The FBE emphasizes the importance of regular and accurate updates to the disclosed information.
• Frequency of Updates: The current requirement for yearly updates is considered insufficient. The FBE recommends more frequent updates, particularly on ad hoc basis for significant regulatory changes, and suggests quarterly consolidated reporting.
• Language and Accessibility: The FBE calls for all disclosures to be made available in English, especially for critical sections like national discretions and Pillar 2, to enhance transparency and comparability.
• Promotion of Level Playing Field: The framework should not only disclose information but also actively contribute to convergence of supervisory practices. The FBE proposes mechanisms to identify and address differing interpretations of regulations.

Key Recommendations

• Monitoring and Consistency: CEBS should ensure consistent interpretation and processing of data across supervisory authorities to maintain comparability.
• Data Quality Assurance: CEBS must monitor the quality of data processing and publication, and take action if delays or inconsistencies occur.
• Enhanced Data Format: The FBE recommends that data tables be available in Excel format rather than PDF, to facilitate easier internal processing by banks.
• Public Disclosure of Confidentiality Waivers: CEBS should regularly inform the public about the use of confidentiality clauses by national regulators to ensure checks and balances.
• Guidelines on Confidentiality: Each supervisory authority should publish guidelines on how they apply the confidentiality waiver to avoid excessive use and ensure transparency.
• Identification of National Discretions: Supervisors should clarify which national discretions can be exercised by institutions to avoid ambiguity.
• Statistical Data Comparability: Where possible, pre-Basel II statistical data should be disclosed to enable meaningful comparisons between Basel I and II figures.
• Contextual Interpretation of Data: Statistical data on supervisory actions, such as on-site inspections, should be interpreted in the overall context of the banking environment.
• Long-Term Database Initiative: In the medium term, CEBS might consider creating a database of CRD definitions and a reverse audit trail to enhance transparency and consistency.
• Identification of Common Standards: The FBE suggests that CEBS should identify and label EU commonalities or "majority standards" in the framework to promote convergence and facilitate quick overviews.

Detailed Comments Summary

1. Demonstration Website: The website is user-friendly and well-structured, but functionality must be maintained as more data is added.
2. Scope of Information: The FBE believes the scope of information is sufficient, but the structure must be complete, especially regarding national discretions.
3. Data Format: Tables should be available in Excel format for ease of internal use.
4. Data Update Mechanism: Regular and timely updates are essential, with mechanisms to address delays or incomplete data.
5. Language Availability: All texts and documents should be available in English, particularly for key sections.
6. Consistency of Interpretation: Consistent interpretation of the Common Reporting Framework is necessary to ensure comparability across the EU.
7. Annex II Review: After one year of operation, the FBE recommends monitoring the usage of the SDF and adjusting the menu of information accordingly.
8. Disclosure of Criteria: General criteria for preferential treatment of public sector entities should be disclosed rather than lists of entities.
9. ECAI Ratings: More detailed information on the treatment of ECAI ratings, including recognition factors and mapping to credit quality steps, is needed.
10. Confidentiality Clause: The FBE highlights the need for transparency regarding the use of the confidentiality waiver.
11. Clarification of Option Exercise: It is important to clarify who is responsible for exercising certain options, especially in the context of national discretions.
12. Parallel Run Variations: Variations in the number of calculations and deadlines for parallel runs should be disclosed to avoid confusion.
13. Advanced Approaches: Differences in admission requirements for advanced approaches should be addressed to promote convergence.

Conclusion

The FBE believes that the supervisory disclosure framework has the potential to significantly enhance transparency and comparability across the EU. However, it stresses the need for ongoing monitoring, timely updates, and the inclusion of mechanisms to address differing interpretations. The FBE is open to revising the framework in the future, based on industry input and practical experience.