The European Banking Authority (EBA) has published the following draft
technical standards developed in connection with the Capital Requirements
Regulation (CRR):
- Implementing Technical Standards on disclosure for own funds which are designed to enhance transparency on the regulatory capital held by European
institutions. Article 433 of the CRR requires that institutions shall
publish the detailed disclosures required at least on an annual basis.
Annual disclosures shall be published in conjunction with the date of
publication of the financial statements. Institutions shall assess the
need to publish some or all disclosures more frequently than annually in the
light of the relevant characteristics of their business such as scale of
operations, range of activities, presence in different countries, involvement
in different financial sectors, and participation in international financial
markets and payment, settlement and clearing systems. That assessment shall pay particular attention to the possible need for more frequent disclosure of items of information prone to rapid change.
- Regulatory Technical Standards (RTS) on own funds which have been consolidated in one:
- RTS on own funds part I. These deal with the different elements of own funds, including: Common Equity Tier 1 (CET1) capital, Additional Tier 1 capital, Tier 2 capital, deductions from the different types of capital, and transitional grandfathering provisions
for own funds;
- RTS on gain on sale. These provide further details of what is meant by, and the appropriate treatment of, a gain on sale, defining such a gain as any increase (or part of an increase) in equity under the applicable accounting framework arising from future
margin income in the
context of a securitisation transaction; and RTS on own funds part II. These explain the conditions under which competent authorities may determine that a type of undertaking recognised under applicable national law qualifies as a mutual, cooperative society,
savings institution or similar institution for the purpose of calculating own funds;
- RTS on credit risk adjustment which clarify the calculation of specific and general credit risk adjustments in order to determine own funds requirements for credit risk. The required calculation is limited to the amounts of credit risk adjustments
that reflect losses exclusively related to credit risk and therefore reduces the institution's CET1 capital. The relevant criteria for this calculation are also provided and, to illustrate, the RTS elaborate further on some specific cases.
The technical standards have been sent to the European Commission for adoption and will form part of the single rulebook.
Related Link:
http://www.eba.europa.eu/-/eba-publishes-first-final-draft-technical-standards-on-own-funds-and-credit-risk-adjustment