In January 2015 the Basel Committee on Banking Supervision (Basel Committee) issued revised Pillar 3 disclosure requirements. These requirements were superseded by further Pillar 3 disclosure requirements in 2004 (as amended in July 2009). This constituted the first phase of the Basel Committee’s review of the Pillar 3 framework.

In March 2007 the Basel Committee published further revisions to the Pillar 3 disclosure requirements completing the second phase of its review. It comprised three elements:

  • consolidation of all existing and prospective Basel Committee disclosure requirements into the Pillar 3 framework;
  • introduction of two new disclosure requirements – a dashboard of a bank’s key prudential metrics and a disclosure requirement for banks which record prudent valuation adjustments; and
  • revisions and additions to the Pillar 3 standard arising from changes to the regulatory policy framework. This included new disclosure requirements in respect of the total loss-absorbing capacity regime for global systemically important banks and revised disclosure requirements for market risk arising from the revised market risk framework published by the Basel Committee in January 2016.
  • The Basel Committee has now published a consultative document that sets out proposals for the third phase review of the Pillar 3 framework, which covers the following elements:
  • revisions and additions to the Pillar 3 framework arising from finalisation of the Basel III framework. This comprises of the following elements: (i) revised and additional disclosure requirements for credit risk; (ii) revised disclosure requirements for operational risk; (iii) revised disclosure requirements for leverage ratio; (iv) revised disclosure requirements for credit valuation adjustments; (v) new disclosure requirements for standardised approach risk weighted assets (RWA) to benchmark internally modelled capital requirements; and (vi) revised disclosure requirements on overview of risk management, key prudential metrics and RWA
  • new disclosure requirements on asset encumbrance;
  • new disclosure requirements on capital distribution constraints. The Basel Committee is proposing to introduce a new disclosure template to provide users of Pillar 3 data with information on the capital ratio of a bank which, if breached, would result in national supervisors imposing CDC. The disclosure would enable market participants to make more informed decisions about the risks of coupon cancellation for capital instruments, thereby potentially enhancing both price discovery and market stability; and
  • amendments to the scope of application of disclosures on the composition of regulatory capital. The Basel Committee is particularly interested in feedback from both preparers and users of Pillar 3 data on the advantages and disadvantages of expanding the scope of application of Template CC1 to resolution groups, relative to retaining its current scope of application to the consolidated group.
  • The deadline for comments on the consultative document is 25 May 2018.

View Pillar 3 disclosure requirements – updated framework (consultative document), 27 February 2018