BCBS: Consultation on the Pillar 3 disclosure requirements

24 June 2014

The Basel Committee on Banking Supervision has launched a consultation on the Pillar 3 disclosure requirements. The Committee has long recognised the importance of effective disclosure. However, the existing requirements have proven inadequate in a number of respects.

The Committee has long recognised the importance of effective disclosure  to enhance market discipline and thereby promote a safe and sound banking system. However, the existing requirements, in particular those related to risk-weighted assets (RWA), have proven to be inadequate.

A key shortcoming has been 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 new standard promotes greater consistency in the way banks disclose information about risks, as well as their risk measurement and management. The aim of the revisions is to enable market participants to compare banks' disclosures of the capital ratio's denominator (i.e. RWA) 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.

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 other market users of Pillar 3 data. It would also welcome feedback from the audit community.

Comments on the proposals should be uploaded by Friday 26 September 2014.

Full publication


© BCBS (BIS)