The European Commission has published the final draft of a Commission Delegated Regulation that supplements the Capital Requirements Regulation (CRR) with regard to regulatory technical standards for disclosure of encumbered and unencumbered assets.
Article 443 of the CRR empowers the Commission to adopt, following the submission of draft technical standards by the European Banking Authority (EBA), regulatory technical standards (RTS) to specify the disclosure of the balance sheet value per exposure class broken down by asset quality and the total amount of the balance sheet that is unencumbered. The EBA carried out a public consultation on the draft RTS between 25 April 2016 to 25 July 2016.
The draft RTS have been developed so as to provide transparent and harmonised information on asset encumbrance across Member States based on a harmonised definition of encumbrance and in order to enable market participants to compare the institutions in a clear and consistent manner. The draft RTS include disclosure templates which are designed to show the amounts of encumbered and unencumbered assets of an institution per exposure class, including a breakdown thereof by an asset quality indicator, being extremely high quality liquid assets and high quality liquid assets. In doing so, they also differentiate assets that are used to support existing funding or collateral needs from those assets that are available for potential funding needs. The templates are supplemented with narrative information on the importance of encumbrance in the funding model of the institution.
[The Council of the EU and the European Parliament now have three months in which to review Delegated Regulation. If approved the Delegated Regulation enters into force on the twentieth day following that of its publication in the Official Journal of the European Union.]