Basel releases new disclosure rules

MANILA, Philippines - The Basel Committee on Banking Supervision has issued the final standard for the revised Pillar 3 disclosure requirements.

The revised disclosure requirements will enable market participants to compare banks’ disclosures of risk-weighted assets.

The revisions focus on improving the transparency of the internal model-based approaches that banks use to calculate minimum regulatory capital requirements.

The revised requirements will take effect from end-2016.

It supersedes the existing Pillar 3 disclosure requirements first issued as part of the Basel II framework in 2004 and the Basel 2.5 revisions and enhancements introduced in 2009.

Chairman of the Basel Committee on Banking Supervision chairman and Sveriges Riksbank Governor Stefan Ingves said in a statement that the revised disclosure framework represents an important shift in both the format and granularity of required bank disclosures.

“These changes substantially strengthen the disclosure framework and will help users of the disclosures to better understand and assess the measurement of a bank’s risk-weighted assets,” Ingves added.

The revised standard published last month retains the structure of the Committee’s June 2014 consultative paper.

Compared with the consultative version, the key changes involve: (a) rebalancing the disclosures required quarterly, semi-annually and annually; (b) streamlining the requirements related to disclosure of credit risk exposures and credit risk mitigation techniques; and (c) clarifying and streamlining the disclosure requirements for securitization exposures.