Scope of application

4.The revised disclosure requirements presented in this guidance supersede the existing Pillar 3 disclosure requirements issued in 2009. These revised requirements are an integral part of the Basel framework and they complement other disclosure requirements issued separately by Central Bank, which are uploaded on Central Bank's website/online portal for banks to download. Pillar 3 applies to all banks in the UAE at the top consolidated level for local banks and all branches of foreign banks. Banks having a banking subsidiary will be required to be consolidated at Group level as one Pillar 3 report as well as at subsidiary solo level as a separate Pillar 3 report Banks offering Islamic financial services should comply with these disclosure requirements. These requirements are applicable to their activities that are in line with Islamic Sharia rules and principals, which are neither interest-based lending nor borrowing but are parallel to the activities described in these Guidance and Explanatory Notes

Implementation date

5.The Pillar 3 tables and disclosures will be effective from the beginning of 2019 for the previous year's figures and every year going forward. Banks need to report in each table as per the requirements for that table set out in the Appendix since few tables are required to be reported every quarter or semi-annually or annually.

Reporting

6.Banks should publish their Pillar 3 report in a stand-alone document on the bank’s UAE-specific website that provides a readily accessible source of prudential measures for users. The Pillar 3 report may be appended to form a discrete section of a bank’s financial reporting, but the full report will be needed to be disclosed separately in the Pillar 3 tables as well.

7.Signposting of disclosure requirements is permitted in certain circumstances, as set out in paragraphs 21–23 below. Banks should also make available on their websites a 5-year archive of Pillar 3 reports (i.e. quarterly, semi-annual or annual) relating to prior reporting periods (past 5 years’ data)

Frequency and timing of disclosures

8.The reporting frequencies for each disclosure requirement are set out in the schedule in paragraph 27 below. The frequencies vary between quarterly, semi-annual and annual reporting depending upon the nature of the specific disclosure requirement. If a bank publishes interim financial statements, then the bank should publish the quarterly Pillar 3 report, three (3) weeks after the interim financial statements are published. For banks who do not have an interim financial statement, the Pillar 3 quarterly report needs to be published 6 weeks from quarter end.

9.A bank’s Pillar 3 report should be published with its financial report for the corresponding period as mandated in paragraph 8 above. If a Pillar 3 disclosure is required to be published for a period when a bank does not produce any financial report, the disclosure requirement should be published as soon as possible. However, the time lag should not exceed that allowed to the bank for its regular financial reporting period-ends (e.g. if a bank reports only annually and its annual financial statements are made available six weeks after the end of the annual reporting period-end, interim Pillar 3 disclosures on a quarterly and/or semi-annual basis should be available within six weeks after the end of the relevant quarter or semester).

Assurance of Pillar 3 data

10.The information provided by banks under Pillar 3 should be subject, at a minimum, to the same level of internal review and internal control processes as the information provided by banks for their financial reporting (i.e. the level of assurance should be the same as for information provided within the management discussion and analysis part of the financial report).

1. •The Pillar 3 Disclosures and reports have to be reviewed by internal audit of all bank for all Pillar 3 reports.
2. •All local banks and large foreign banks will need to have the annual Pillar 3 reports externally audited every two (2) years and smaller foreign banks (as defined in paragraph 27) will need to have the annual Pillar 3 reports externally audited every four (4) years.

11.Banks should also have a formal board-approved disclosure policy for Pillar 3 information that sets out the internal controls and procedures for disclosure of such information. The key elements of this policy should be described in the year-end Pillar 3 report. The board of directors and senior management are responsible for establishing and maintaining an effective internal control structure over the disclosure of financial information, including Pillar 3 disclosures. They should also ensure that appropriate review of the disclosures takes place. One or more senior officers of a bank, ideally at board level or equivalent, should attest in writing that Pillar 3 disclosures have been prepared in accordance with the board-agreed internal control processes. For larger banks, Board member attestation will be expected.

Proprietary and confidential information

12.The Central Bank believes that the disclosure requirements set out below strike an appropriate balance between the need for meaningful disclosure and the protection of proprietary and confidential information. In exceptional cases, disclosure of certain items required by Pillar 3 may reveal the position of a bank or contravene its legal obligations by making public information that is proprietary or confidential in nature. In such cases, a bank would need to approach the Central Bank first and obtain approval for non-disclosure of such information they deem to be confidential. The Central Bank will review the information and provide approval if the bank does not need to disclose those specific items, but should disclose more general information about the subject matter of the requirement instead. The bank should also explain to Central Bank the specific items of information that cannot be disclosed and the reasons for this.