European Banking Authority consults on Liquidity Coverage Ratio

On 7 June 2012, the European Banking Authority (EBA) released draft Implementing Technical Standards setting out supervisory reporting requirements for the Basel III liquidity rules: the Liquidity Coverage Ratio and the Net Stable Funding Ratio.

Based on the current timetable, all credit institutions and investment firms that deal on their own account or underwrite financial instruments will have to comply with these reporting requirements from 1 January 2013. The default position is that firms will need to report on both a consolidated and individual basis.

Some of the data that need to be reported are supplementary to current Corporate Reporting (COREP) and Financial Services Authority (FSA) reporting and firms now face a significant challenge to be ready in time.

Firms face significant challenges relating to data requirements, IT systems, reporting processes, strategic funding decisions and their overall liquidity management framework, which need to be considered without delay. We are working with our clients to prepare for the Basel III and other reporting requirements in the following ways:

  • Understanding the impact of Basel III ratios on specific business lines, products and transactions and embedding new liquidity standards into the business
  • Perform a gap analysis to assess existing liquidity reporting systems
  • Optimise data quality, in particular around data capture and categorisation, and
  • Help with the implementation of a liquidity reporting system