The European Banking Authority (EBA) launched today a consultation on draft Regulatory Technical Standards (RTS) on the disclosure of encumbered and unencumbered assets for the provision of transparent and harmonised information on the topic, as laid down in the Capital Requirements Regulation (CRR). These draft RTS, which build on the EBA Guidelines on the same topic, detail the disclosure requirements and provide additional information. The consultation will run until 25 July 2016.
Disclosure on asset encumbrance based on consistent definition and formats increases market discipline of institutions and allows the provision of transparent and harmonised information on the topic across EU Member States so as to enable market participants to compare the institutions in a clear and consistent manner.
These draft RTS set out the data that is required to be disclosed on encumbered and unencumbered assets, the format, as well as the timing of the publication. The proposed requirements will disclose part of the data already reported through COREP on a continuous basis. Since the ITS arising from this requirement entered into force in December 2014, the EBA has gathered and analysed the reported data and in September 2015, issued an inaugural report on asset encumbrance where the need for the enhancements proposed through these RTS were identified.
These draft RTS are addressed to institutions and provide three disclosure templates to be completed and published, along with line-by-line instructions for completing them. Institutions will have to disclose information in accordance with these disclosure templates, and provide some additional information on the importance of encumbrance in their individual funding model.
Comments can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 25 July 2016. All contributions received will be published following the close of the consultation, unless requested otherwise.
A public hearing will take place at the EBA premises on 1 June 2016 from 09:00 to 10:00 UK time.
Legal basis and background
The proposed draft ITS have been developed according to Article 443 of Regulation 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms (CRR), which mandates the EBA to develop draft RTS on unencumbered assets taking into account the European Systemic Risk Board’s (ESRB) Recommendation D (ESRB/2012/2 of 20 December 2012) on the funding of credit institutions.
The EBA defines asset encumbrance as pledging an asset or entering into any form of transaction to secure, collateralise or credit enhance any transaction from which it cannot be freely withdrawn.
- Association for Financial Markets in Europe
- Austrian Federal Economic Chamber, Division Bank and Insurance
- European Banking Federation
- European Savings and Retail Banking Group (ESBG)
- FRENCH BANKING FEDERATION
- Genossenschaftsverband Bayern e.V.
- German Banking Industry Committee (GBIC)
- Standard Chartered Bank
- Virgin Money