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European Commission adopts report assessing the economic consequences of CBCR

  • European Union (old) Image

30 Oct 2014

The European Commission has today adopted a report assessing the economic consequences of country-by-country reporting (CBCR) by banks and investment firms.

CBCR was introduced into EU law in June 2013 and implemented in the UK in December 2013.  It requires certain financial institutions to report each year on a variety of measures (including turnover, profits, tax paid and subsidies received) for each country where they have an establishment.

The report, which draws on the results of a public consultation, an external study and a roundtable discussion, explains that the expectation of stakeholders is that CBCR will have a positive impact on transparency and accountability. However, it is suggested that the transparency benefit would be enhanced by additional guidance to ensure consistency across the EU.

According to the report, expected positive effects of CBCR include:

  • a greater ability for investors to make informed investment decisions and hold banks to account;
  • better risk management by reporting institutions;
  • a reduction in the cost of equity capital;
  • reduced ability for reporting institutions to mask their true performance; and
  • increased accounting quality, which could lead to greater levels of competitiveness and financial stability.

The full report and press release can be obtained from European Commission website.

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