BRUSSELS, 28 August 2016 – In ESBG's detailed response to the European Banking Authority (EBA) consultation on the draft guidelines on Liquidity Coverage Ratio (LCR) disclosure, its members' presented their view that the EBA guidelines are not the appropriate legislative level and that in order to make sure there is a solid legal basis, an amendment of the CRR would be necessary.
On 11 May 2016, the EBA launched a consultation on its draft guidelines on the LCR disclosure. These guidelines build on the LCR disclosure standards published by the Basel Committee on Banking Supervision (BCBS) in March 2014. The EBA's draft guidelines include (i) a qualitative and quantitative harmonised table for the disclosure of mainly information on liquidity risk management as laid down by the Capital Requirements Regulation (CRR) and (ii) quantitative and qualitative harmonised templates, with their corresponding instructions, for the disclosure of information on the LCR composition. In addition, they specify the key figures and metrics in the context of liquidity risk. According to the EBA, the use of these uniform tools will improve transparency and comparability of the liquidity coverage ratio and other liquidity risk management related information at a cross-jurisdictional level. This will allow market participants to make economic decisions on the basis of well-informed judgments of banks' liquidity profiles and therefore will foster market discipline.
ESBG's submission compiled the main questions and concerns held by members based on the draft guidelines. The response was quick to point out that as most of the aspects of the guidelines are based on requirements of the Basel standards, which are not designed for smaller or non-internationally active banks, they do not properly respect the principle of proportionality. Members went on to highlight the importance of allowing institutions enough time to adapt their systems to new or revised disclosure requirements, while, also warning that due to the highly volatile nature of LCR the level of granularity being proposed may not be more significant or meaningful to members. As with the level of granularity the true value of the proposed mandatory daily reporting was also questioned in ESBG's response.
The EBA will take the responses received into account before the foreseen application date which is not expected to be earlier than 30 June 2017.
>> Read the detailed answer of ESBG here (.pdf)