Monday, September 12, 2011

European banks embracing disclosure

As the probability of a sovereign debt default increases, European banks turn to disclosure to restore confidence in their solvency.

Last week, BNP Paribas issued a question and answer to address its solvency.  This came as no surprise given that its Chairman Michael Pebereau discussed how "utter transparency" (providing market participants with current asset and liability-level data) was needed to address solvency and provide more oversight (which he knows the bank will get in the form of market discipline).

This week, Societe Generale disclosed its exposure to troubled sovereign debt.  The title at the top of the press release "Hard Facts" absolutely makes the case for why we need current asset and liability-level disclosure.

Frédéric Oudéa, the Group’s Chairman and CEO, stated:
”In the current uncertain and sometimes irrational environment, it is necessary now more than ever to understand the hard facts. 

Clearly the banking industry understands that disclosure of the facts is required to restore confidence.

Hopefully, the regulators will encourage more of this by making disclosure of current asset and liability-level data a requirement.

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