Asset Encumbrance Disclosures: Navigating The Maze

Despite the increasing scrutiny by regulators and market participants on banks' asset encumbrance levels, these remain poorly understood. With the objective of increasing market transparency on this area, a number of initiatives have been developed by regulators and standard setters. These include the recommendations to enhance the risk disclosures by banks published by the Enhanced Disclosure Taskforce (EDTF) and requirements to publicise asset encumbrance information within Pillar 3 disclosures, in addition to existing accounting requirements in IFRS 7.

In this post we explore these initiatives and discuss how firms can prepare to comply with the existing disclosure requirements. If you are looking for some background information on the topic of Asset Encumbrance, we invite you to read our previous post: Asset encumbrance: The elephant in the room?.