Transparency for efficiency and financial stability

APPENDIX – Banks’ risk disclosure requirements

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APPENDIX – Banks’ risk disclosure requirements

Pillar 3 - disclosure requirements on banks' capital and risks

Published: 3 November 2022

Work on revising Pillar 3 began after the global financial crisis and was carried out in three stages. The first stage involved a fundamental change and update of the previous disclosure requirements from 2004 and 2009. One problem raised early on by investors and other stakeholders was that information on Pillar 3 was difficult to find and lacked clear definitions. It was not possible to compare banks or countries with each other or to understand the broader picture of risk. A revision of Pillar 3 was therefore necessary.

In January 2015, the first part of the revision was published. The new transparency requirements follow five guiding principles. This means that banks' risk disclosures shall be

  1. clear
  2. comprehensive
  3. useful
  4. consistent
  5. comparable.[22] See Pillar 3 framework - Executive Summary ( for a detailed description of the guiding principles.

The new Pillar 3 framework is based on harmonised and standardised disclosure requirements with reporting templates and clear definitions. An important aspect in the development of the new requirements by the Committee was that the information should be comparable across banks and countries, while being easily accessible. As a first step, the disclosure requirements for credit, liquidity and market risk were revised.

The second part of the revision was completed in March 2017, at which point all the different disclosure requirements were consolidated into one standard. For example, Stage 2 introduced new disclosure requirements on loss-absorbing capacity (TLAC) and updated disclosure requirements on operational risks.

The third part was finalised in December 2018 and includes requirements for asset encumbrance, leverage ratio and new floor rules for risk-weighted assets. The European Banking Authority is currently working on introducing the final parts of Pillar 3 into European legislation.