10 Oct 2008, Ellen Davis, Operational Risk & Regulation
LONDON - A new report from the Committee of European Banking Supervisors (Cebs) says the banks it examined could do better when it comes to disclosures about their business models, risks and risk management.
The report, ‘Follow-up review of banks’ transparency in 2008 half year results’, says only 45% of the banks in the Cebs sample provided detailed disclosures that met the organisation’s best practice standard for business models. Some 32% provided some disclosure, while 14% gave investors little information and 9% provided none.
The information Cebs is looking for includes “descriptions of the business model and changes, descriptions of strategies and objectives, descriptions of the importance of activities (including instruments and functioning) and descriptions of the role and the extent of the involvement of the institution)”.
Risk management disclosure was even worse, with only 32% providing detailed disclosure and 54% providing only ‘some’ disclosure. The majority of firms failed to disclose such things as market turmoil-specific information describing the nature and extent of risks incurred and liquidity risk. Only about 36% of firms were deemed to be in line with the disclosure best practices Cebs put forward in June.
The report can be found at: http://www.c-ebs.org/formupload/69/691c71d6-85cc-4c2c-81e3-a287fb7c2a4b.pdf.