Basel Committee: Review of the Pillar 3 disclosure requirements - consultative document

Date Published 6/30/2014
Author Marja Hoek-Smit
Theme Retail Housing Finance
Country

June 2014

The Basel Committee on Banking Supervision has today published for consultation a Review of the Pillar 3 disclosure requirements. The Committee acknowledged that the existing Basel framework Pillar 3 disclosure requirements, in particular those related to risk-weighted assets (RWA), have proven to be inadequate in a number of respects. A key shortcoming was the lack of consistency across banks, both with respect to the form and granularity of the information disclosed and in the interpretation of disclosure requirements.

The proposed revisions aim to improve comparability of banks' disclosures of the capital ratio's denominator (i.e. RWA, including mortgages) and to assess more effectively a bank's overall capital adequacy. The disclosures are also a particular response to concerns about the opacity of internal model-based approaches to determining RWA. In most cases, the revisions do not require banks to disclose additional information but rather to present requirements in a more detailed and prescriptive way to facilitate comparability across banks. For example, under the revised standards, banks would be required to disclose the drivers of changes in risk-weighted assets and the actual versus forecast performance of certain modelling parameters.

The Committee welcomes comments on this consultative document. As a key aim of the review is to improve market discipline, the Committee would particularly welcome feedback from investors, analysts, rating agencies and the audit community and other market users of Pillar 3 data.

The committee seeks comments by 26 September 2014.

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