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ESBG is concerned by the continually increasing scale of disclosures and the sheer amount of information required. Instead of allowing institutions to better assess their risks this may in fact overwhelm users. It is the opinion of ESBG´s members that some of the EBA's proposals for bringing the EBA's proposals in line with the CRR would be very demanding to implement (e.g. exposure classes in template EU OV1-B, EU CRB-B). While ESBG´s members have reacted positively to the fact that European G-SIBs will have the possibility to report on a common standard with other G-SIBs, making international comparisons and benchmarks easier, they have been keen to stress that in a number of instances the required data or information to be disclosed goes beyond the requirements in the CRR and the revised Pillar 3 standard from the BCBS. This should not be the case.
As with all requirements and regulations, the principle of proportionality is key and the Pillar 3 requirements are no different. In general, the Basel Pillar 3 standards seem to have been drafted with internationally active or even publicly traded institutions in mind and for small banks, who also have to apply these standards, the implementation costs have represented a substantial burden. ESBG has been quite vocal on the need for proportionality and members have voiced their appreciation, in this case, for the fact that the guidelines basically focus on G-SIIs and O-SIIs.
Members have emphasised that signposting for individual parts should be allowed as mentioned in chapter 4.2 – section D (page 61), in case the location of the publication varies for some parts. The timing of disclosure is a critical issue. The Basel Committee has proposed that prudential data should be disclosed at the same time as annual financial statements. ESBG considers an arrangement as envisaged by the EBA, i.e. that publication can occur "within reasonable delay" (page 21) to be sensible and sufficient and appreciate the EBA statement in this regard. Also, members are working under the assumption that as the guidelines will not have to be implemented and applied until 31 December 2017, the first Pillar 3 report issued after this date will not have to contain any comparative data from the previous year.
Finally, it has to be taken into account that a revision of the CRR/CRD IV is going to be undertaken in 2017. In this regard, it will be desirable to understand how the requirements in Part Eight of the CRR are going to be modified before issuing new Guidelines, in order not to overload credit institutions with constant modifications of disclosure requirements.
Similarly, the BCBS is currently finalising a review of a number of the approaches used to quantify risk weighted assets; this applies to credit, market and operational risk. These revisions, once implemented, will have an impact on disclosures and the EBA should ensure that any new requirements introduced by the Guidelines (or the forthcoming revisions of the CRR) take into account anticipated changes in the underlying approaches to risk quantification. If this is not the case, banks might have to implement costly IT solutions for the purposes of disclosure in only one period, as the required data will no longer be relevant if underlying methodologies change.