18 June 2008

CEBS report on banks' transparency

The assessment covered disclosures on exposures and their impacts on results and looked at information on business models, risk management practices and accounting and valuation practices.

CEBS has published the findings of an assessment of banks’ transparency with regard to the activities and instruments affected by the recent market turmoil. The assessment covered disclosures on exposures and their impacts on results and looked at information on business models, risk management practices and accounting and valuation practices.

 

The main findings of the analysis showed that institutions made:

• limited disclosures on the business models underlying the activities affected by the sub-prime crisis and the related risk management practices (especially liquidity risk);
• diverse disclosures on exposures and on the impact of the crisis;
• generic disclosures on the valuation of exposures affected by the market turmoil and their accounting; and
• varied presentations of disclosures.

 

The findings allowed to identify examples of disclosures which CEBS believes represent good practice.CEBS considers these disclosures to be particularly informative:

• comprehensive disclosures on business model and risk management;
• meaningful disclosures on exposures and impacts, with appropriate levels of granularity;
• useful disclosures on accounting policies; and
• improved presentation of the disclosures.

 

 

CEBS recommends the application of the observed good practices by all banks, albeit in a manner commensurate with an institution’s exposures and involvement in the activities affected by the crisis.

 

Press release

Report

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