Banks should be forced to reveal more data about their financial reserves so that they can’t conceal poor management decisions and excessive risk-taking, global regulators said.
Lenders should “disclose the full list” of instruments that they are counting toward meeting their required minimum capital levels, the Basel Committee on Banking Supervision said in an e-mailed statement today.
“Insufficiently detailed disclosure and a lack of consistency in reporting” may have “hampered” regulators and contributed to the financial crisis that followed the collapse of Lehman Brothers Holdings Inc. in 2008, the group said. Banks (SX7P) should also show how they have applied rules forcing them to write down the value of some securities they count as capital.
Global regulators have agreed since the crisis to more than triple the core capital that banks must hold to guard themselves against insolvency and also to force them to stockpile easily sellable assets to survive a short-term funding squeeze.
Lenders including HSBC Holdings Plc (HSBA), Citigroup Inc. (C) and BNP Paribas SA have warned that plans by the Basel committee to impose capital surcharges on systemically important lenders could force them to cut loans to businesses and support to international trade.
The Basel committee brings together regulators from 27 countries including the U.K., U.S. and China. The group is seeking views on the disclosure plans until Feb. 17.
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