Alert January 03, 2012

Basel Committee Proposes Capital Disclosure Requirements

The Basel Committee on Banking Supervision (the “BCBS”) issued a proposal (the “Proposal”) implementing the disclosure requirements under Basel III that would require banks to disclose the composition of their capital and their capital ratios.  The Proposal is designed to improve the transparency and comparability of a bank’s capital base.  The Proposal sets forth the following requirements:

  • a common template for banks to use to report the breakdown of their regulatory capital after January 1, 2018 that is designed to meet the Basel III requirement to disclose all regulatory adjustments, including amounts falling below thresholds for deduction, and that is intended to enhance consistency and comparability in the disclosure of the elements of capital between banks and across jurisdictions; 
  • an approach designed to fulfill the Basel III requirement to provide a full reconciliation of all regulatory capital elements back to published financial statements;
  • a common template for banks to use to meet the Basel III requirement to provide a description of the main features of capital instruments;
  • the method of disclosure to fulfill the Basel III requirement that banks provide the full terms and conditions of capital instruments on their websites and the requirement to report the calculation of any ratios involving components of regulatory capital; and
  • a modified version of the post-January 1, 2018 common template to be used by banks during the Basel III transitional period that is designed to fulfill the Basel III requirement that banks disclose the components of capital that are benefiting from transitional arrangements under Basel III.

Comments on the Proposal must be submitted to the BCBS by February 17, 2012.