The Committee of European Banking Supervisors (CEBS) has published today the outcome of a third assessment of banks' transparency on exposures affected by the financial crisis. This work follows up on earlier work leading to the publication in June 2008 of CEBS's 'Report on banks' transparency on activities and products affected by the recent market turmoil and in October 2008 of a follow-up report assessing 2008 interim results.
The present findings show that the disclosure made by 19 banks in their 2008 last quarter (4Q) and preliminary year-end (YE) reports do not show significant improvements compared to the 2008 interim results:
As regards quantitative disclosures - on impacts and exposure levels – banks continue to provide satisfactory information, but
For qualitative disclosures - on business models and risk management – there is still room for improvement.
CEBS is of the view that, especially for the latter, further progress needs to be made. This is deemed increasingly important for business models, which often are directly impacted by the financial crisis. The findings also underline the importance of disclosures on risk and risk management, as the crisis has raised some questions on the command that institutions have over the risks they incur not least under adverse conditions.
CEBS strongly encourages banks not least in the present crisis to bring their interim, as well as quarterly and preliminary, results into line with the good practices published in June. Better information will over time enhance confidence in banks and financial markets.
CEBS expects banks to carefully judge that all kind of exposures are subject of relevant and appropriate disclosures that allow market participants to assess an institution's situation. This is all the more important as the problems banks are facing now are no longer limited to the areas covered in the CEBS June 2008 report (e.g. sub-prime exposures and related transactions) but have taken on a more general dimension.
CEBS members will continue promoting the good practices among their banks and to ensure that the main ideas and principles underlying CEBS's good practices are applied to disclosures on other activities affected by the crisis.
CEBS will carefully analyse the 2008 audited annual reports and Pillar 3 reports to assess whether the gaps that have been identified in the previous and present analyses have been addressed in the forthcoming annual and Pillar 3 reports. To the extent that the conclusions in that respect will not be satisfactory stronger policy measures will be considered.