Banks hauled over the coals for lack of transparency and disclosure

“With regard to the new disclosures on remuneration policy and practices, there is room for significant improvements for the majority of banks included in the sample,” the European Banking Authority said in a report on banks’ transparency.

They also need to better show the link between pay practices and risk, the EBA said.

The EBA said that a quarter of the 20 banks in the sample provided “insufficient” information on remuneration.

It added that a further 50 per cent could improve their disclosure.

It emerged that the remaining five banks had not published their data when the EBA carried out its assessment.

Banks need to provide more aggregate quantitative information on pay, the EBA said.

Pay also needs to be broken down by senior management and staff whose actions have a material impact on risk.

The EBA added that the payment reports should also provide a breakdown by business area.

The need for banks to provide more details on pay for 2010 was a new requirement so it was not surprising that disclosure could be improved, the EBA conceded yesterday.

The findings were part of a report on banks’ transparency and discipline on a range of issues.

These are known as Pillar 3 disclosures, which aim to encourage banks to provide high quality and consistent information about their finances.

In its latest report, the EBA said that there had been an improvement in most areas, but some criticisms remained valid and disclosures on counterparty credit risk and interest rate risk should be improved.

The EBA’s sample was made up of most of the top banks in Europe.

It included most of the major players such as UK-based HSBC, Spanish bank Santander – which also operates in the UK, British bank Barclays, Swiss bank UBS, German-based Deutsche Bank and French bank BNP Paribas.