Asset Encumbrance

On 24 July 2014, the European Banking Authority (EBA) published its revised, final draft of the implementing technical standards (ITS) on reporting for asset encumbrance (Reg (EU) 2015/79). The ITS on Asset Encumbrance complement the existing supervisory reporting framework (CoRep and FinRep) and provide supervisory authorities with a standardised and harmonised view of the level of asset encumbrance in institutions and thus a better understanding of institution-specific risk profiles. This enables supervisory authorities to better assess financial risk, which is expected to lead to increased financial stability, through reduced losses for investors as well as the entire economic system.

In accordance with the Capital Requirements Regulation (CRR), EBA initially published guidelines (GL) on asset encumbrance (EBA/GL/2014/03), which outlined disclosure requirements. In the future, these disclosure  GL are to be replaced by the final version of the regulatory technical standards (RTS) published by the EBA in March 2017 (EBA/RTS/2017/03) but yet to be adopted by the European Commission, which call for enhanced disclosure based on three disclosure templates. In accordance  with the requirements, institutions will have to deliver information on assets needed to support existing funding and collateral and to disclose the available assets for potential funding. In addition, institutions must provide detailed information on the importance of asset encumbrance to  their individual funding models.

BearingPoint offers with its ABACUS/DaVinci modules "Asset Encumbrance" and "Disclosure Asset Encumbrance" reporting software that covers all EBA reporting and disclosure requirements for encumbered assets. ABACUS/DaVinci fills the forms for asset encumbrance via standard interfaces and will also respond to future RTS regulation to help banks meet future reporting requirements.

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