Federal banking regulators say that banks must start providing better capital disclosure in the first quarter of fiscal 2013, and will have to fully implement enhanced disclosure by the third quarter.
The Office of the Superintendent of Financial Institutions (OSFI) issued a draft letter that clarifies the planned implementation of new capital disclosure rules that are being introduced under the Basel Committee on Banking Supervision’s new capital adequacy regime, known as Basel III.
The Basel Committee issued its final disclosure rules in late June, which set out a framework to ensure that the components of banks’ capital bases are publicly disclosed in standardized formats. It notes that the financial crisis revealed varying levels of disclosure, and a lack of consistency in that disclosure, among banks; which, in turn, contributed to market uncertainty during the crisis. These new disclosure requirements “are intended to improve both the transparency and comparability of institutions’ capital positions,” it says.
OSFI says that these public disclosures are required, regardless of the size of the institution and whether the institution is publicly listed. It will also require institutions to make “modified minimum composition of capital disclosures” for the first and second quarters of fiscal 2013, which discloses regulatory adjustments on a condensed basis, rather than individually as prescribed under the new rules; and, omits certain line items allows less detail in certain areas.
Firms will be required to fully implement the new disclosure rules starting in the third quarter, which is July 31, 2013, for banks with October 31 year ends. OSFI says it will issue separate guidance on these final requirements.
Comments on the draft guidance is due by September 17.