EBA欧洲银行-24-March-2009-28Transparency-assessment-prelim-YE-2008-results29_11页_203kb

Summary of CEBS Follow-up Review on Banks' Transparency in 2008 Q4 and Preliminary Year-End Results

Core Content

This report presents the findings of CEBS's follow-up review on banks' transparency in their 2008 Q4 and preliminary year-end (YE) disclosures, in relation to the June 2008 report and the October 2008 follow-up report. The objective is to assess the implementation of good practice disclosures and compare them with previous disclosures.

Main Findings

• Quantitative Disclosures: Banks generally provided satisfactory quantitative information on the impact of the market turmoil and exposure levels. However, some disclosures were less detailed than in previous reports.
• Qualitative Disclosures: Disclosures on business models, risk management, and accounting practices showed room for improvement. Many banks did not provide detailed qualitative information.
• Impact of the Crisis on Results: About two-thirds of banks provided detailed information on the impact of the crisis on results, though this was less detailed than in annual reports. Some banks did not clearly explain the impact, even though the information was commensurate with the crisis.
• Exposure Levels and Types: Similar to the impact section, about two-thirds of banks provided detailed information on exposure levels and types, but some institutions showed a reduction in detail. Banks should disclose exposures in a more granular manner, including credit quality, geographic origin, and product characteristics.
• Accounting Policies and Valuation Issues: About 58% of banks provided detailed information on valuation and reclassification, though this was generally less detailed than in annual reports. Some banks included references to previous or forthcoming reports. The use of fair value options and the treatment of day 1 profits were also considered.
• Risks and Risk Management: Most banks provided limited or no detailed information on risks and risk management. CEBS emphasized the need for more specific discussions on crisis-related risks, particularly liquidity risk, and the corrective measures taken.
• Other Disclosure Aspects: Only two banks included information on disclosure policies and principles. There was no significant change in the way disclosures were presented, though cross-referencing and the use of tables and graphs were noted as helpful.

Key Areas for Improvement

• Business Models: Only about 10% of banks provided detailed information on their business models, including changes due to the crisis. CEBS recommends more detailed descriptions.
• Risk Management: Banks should provide more specific information on the nature and extent of risks, particularly liquidity risk, and the corrective measures taken.
• Disclosures on Government Interventions: Banks should disclose more information on government interventions and relief programs, including their background, terms, and impact on shareholders.
• Consistency and Clarity: Banks should ensure that disclosures are consistent across different sections and that complex terminology is clearly explained.

Recommendations

• Banks should align their quarterly and preliminary disclosures with the good practices identified in the June 2008 report.
• Disclosures should include references to other sources where relevant information can be found.
• Banks should focus on providing detailed and relevant disclosures for areas affected by the crisis, including retail and corporate lending, property-market related activities, and asset securitisations.
• CEBS will continue to monitor and promote the use of good practices in future reports, with the final assessment expected in June 2009.

Conclusion

The findings indicate that while there has been some improvement in disclosures, there is still a need for greater transparency and detail, particularly in qualitative aspects. CEBS encourages banks to enhance their disclosures to ensure that market participants can fully understand the risks and exposures they face.