September 04, 2017

EC published the Delegated Regulation that supplements the Capital Requirements Regulation (CRR or Regulation (EU) No 575/2013) on regulatory technical standards for disclosure of encumbered and unencumbered assets. Annexes containing templates and instructions for disclosure were also published. The Delegated Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

Article 1 of this regulation states that institutions shall disclose:

The amount of encumbered and unencumbered assets under the applicable accounting framework by asset type

Information on collateral received by asset type

The liabilities associated with encumbered assets and collateral received

Narrative information relating to the impact of their business model on their level of encumbrance and the importance of encumbrance in their business model

 

Additional disclosure requirements for certain institutions have been stated in Article 2, which shall apply one year from the entry into force of this regulation. This regulation is based on the draft regulatory technical standards submitted by EBA to the EC. The final standards consider the outcome of the EBA consultation that was published on April 25, 2016 and closed on July 25, 2016. CRR (Article 443) requires EBA to develop regulatory technical standards to specify the disclosure of balance sheet value per exposure class broken down by asset quality and the total amount of the balance sheet value that is unencumbered. EBA considers that, in the EU, disclosure on encumbrances is vitally important as it allows market participants to better understand and analyze the liquidity and solvency profiles of institutions and compare these profiles across member states.

 

Related Links

Delegated Regulation (PDF)

Templates and Instructions (PDF)

CRR (PDF)

Keywords: Europe, EU, Banking, Asset Encumbrance, Disclosures, Regulatory Technical Standards, CRR, EC