CEBS consults on bank disclosures

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11 Oct 2009

The Committee of European Banking Supervisors (CEBS) has published a consultation paper proposing disclosure guidelines intended to help financial institutions improve their risk disclosures in the wake of the financial crisis.

The disclosure guidelines are divided into three different parts, discussing respectively:
  • general principles to be applied to high quality disclosures
  • principles dealing with the content of disclosures on areas or activities under stress, in particular business models, impacts on results and risk exposures, impacts on financial positions, risk management, and sensitive accounting issues
  • guidance on presentational aspects of disclosures
Regarding sensitive accounting issues, the proposed disclosure guidelines state:

11. Financial institutions should be as specific as possible with regard to sensitive accounting issues. Disclosures should cover:

  • an adequate description of the accounting policies that are of particular relevance for the activities in question;
  • details of relevant changes, if any; and
  • detailed information where significant judgement has been applied.
Financial institutions are encouraged to highlight accounting policies that are of particular relevance for the areas or activities under stress. Such descriptions are most valuable when they focus on the specificities of the situation faced by the institution, rather than recycling generic descriptions.

 

Especially in a period of turbulence, when market confidence may be faltering, clear information on the management judgements affecting accounting figures is of the utmost importance since these can significantly affect the amounts recognised in the financial statements. For instance, judgement is called upon for fair values for financial instruments (especially when marking to model), impairment of financial and intangible assets and defined benefit pension schemes.
Comments are requested by 15 January 2010. CEBS intends to hold a public hearing in January 2010 in London, inviting supervised institutions and other market participants to present their views. Click to download:

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