Plans by banking regulators to bolster capital disclosure requirements will be helpful to analysts that follow the sector, says Fitch Ratings.
The rating agency says that the Basel Committee on Banking Supervision’s proposals to improve capital disclosure by requiring far more detailed disclosure, reported in a consistent manner, should provide helpful information for bank analysis.
“Comparing the capital adequacy of banks across jurisdictions is of paramount importance to bank analysts,” says Janine Dow, senior director in Fitch’s financial institutions team. “The calculations made to achieve this currently need be kept at a relatively high level, in part because published disclosure hampers analysts’ ability to fine-tune the required adjustments.”
Fitch notes that the Basel Committee’s proposals aim to ensure that banks produce more detailed disclosure, and that they disclose capital items and regulatory adjustments sufficient to enable those using regulatory capital ratios to compare these numbers between banks and across jurisdictions.
In particular, it says that “a substantial leap forward in transparency” would be achieved once more comprehensive and consistent disclosure is provided around risk-weighted asset calculations.