(EBA) to develop draft regulatory technical standards (RTS) on unencumbered assets taking into account the European Systemic Risk Board’s (ESRB) Recommendation of 20 December 2012 on the funding of credit institutions.

The EBA has now published a final report containing final draft RTS which, in addition to fulfilling the requirement in the CRR, fulfils Recommendation D on market transparency on asset encumbrance in the ESRB Recommendation.

The EBA has produced these draft RTS 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 provide three disclosure templates and a box for narrative information to be filled in by the institutions in respect of the importance of encumbrance in their funding model. The following information will be required:

  • encumbered and unencumbered assets in carrying amount and fair value by broad category of asset type, with the carrying amount of unencumbered assets broken down by asset quality (Template A);
  • collateral received by an institution, by broad category of product type (Template B);
  • carrying amount of encumbered assets/collateral received and associated liabilities (Template C); and
  • narrative information on the importance of asset encumbrance for an institution (Template D).

The templates included in the RTS are designed to show the amounts of encumbered and unencumbered assets of an institution. The templates are also supplemented with narrative information on the importance of encumbrance in the funding model of the institutions. The EBA believes that disclosure by institutions about encumbrance is vitally important, as it allows market participants to better understand and analyse the liquidity and solvency profiles of institution.

The draft RTS have been submitted to the European Commission for endorsement.

View EBA final report and final draft RTS on disclosure of encumbered and unencumbered assets under CRR, 3 March 2017

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