Bank disclosure review outcome: Better information, less compliance cost
The Bank issued a consultation paper on registered bank disclosure in August this year and has now followed this up with a policy outcome statement.
Deputy Governor Grant Spencer said the changes in disclosure requirements will significantly reduce banks' compliance costs, while at the same time creating more manageable disclosure documents that are better aligned with the needs of investors and analysts.
"Some elements of the regime will be dropped completely, while other parts, which can be costly to produce, will be streamlined and simplified," Mr Spencer said.
"The result will be a regime that produces better, more accessible information for users at lower cost to the banks."
Mr Spencer added that the Reserve Bank appreciated the level of engagement received from the banks and from interested users. He said the consensus around the options presented was encouraging and the Reserve Bank would now put the preferred option into effect.
The main changes to the existing regime include:
- Dropping the quarterly Key Information Summary and Supplemental Disclosure Statement
- Introducing a single quarterly disclosure document aimed at more financially savvy readers
- Cutting by three or four times the size of the half-year disclosure document, by basing it on interim rather than full-year accounting standards
- Further rationalisation of information across all time periods
While these main features will go ahead as proposed, the Reserve Bank has also taken into account concerns raised during the consultation process. For instance, the Reserve Bank has accepted that the extra compliance cost for banks in producing an interest-rate re-pricing schedule every quarter rather than every six months, outweighs the advantages of more frequent updates for users.
This is the first major overhaul of the disclosure regime since it was set up in 1996 and will better align disclosure information with its original purpose of enhancing market discipline in the banking sector.
Subject to the Orders in Council process, required to bring these changes into effect, the first disclosure statements under the new regime will be for reporting periods ended 31 March 2011.
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