As part of the adoption of the Basel 2 framework, in order to strengthen market discipline, Bank of Italy Circular No. 263 of 27th December 2006 and subsequent amendments requires intermediaries to make disclosures concerning capital adequacy, exposure to risk and the general characteristics of the systems they use to identify, measure and manage those risks (the Basel 2, Pillar 3).
The new prudential rules for banks and investment companies contained in EU Regulation 575/2013 (the Capital Requirements Regulation, known as the CRR) and in the EU Directive 2013/36/EU (the Capital Requirements Directive, known as CRD IV), came into force from 1st January 2014. These transpose standards defined by the Basel Committee on Banking Supervision (known as the Basel 3 framework) into European Union regulations. On conclusion of a public consultation process started in November 2013, on 17th December 2013 the Bank of Italy published Circular No. 285 “Rules for prudential supervision of banks”, which implements the new EU regulations.
The Pillar 3 Disclosures are regulated directly by Part Eight and Part Ten (Title I, Chapter 3) of the CRR and by regulatory and implementation provisions issued by the European Commission1 from that same date, to regulate the following:
- standard templates for the public disclosure of information on own funds (regulatory capital);
- standard templates for the public disclosure of information on own funds in the period running from 1st January 2014 to 31st December 2021;
- disclosure obligations concerning reserves in equity;
- standard templates for the disclosure of information on indicators of systemic importance;
- disclosures concerning balance sheet assets free from encumbrances;
- standard templates for the disclosure of information on leverage ratios.
1) The “Regulatory Technical Standard” – RTS and “Implementing Technical Standard” – ITS respectively.