EBA launches consultation on new framework for Operational Risk Business Indicator

Posted on March 3, 2024 by Editor

The European Banking Authority (EBA) has launched a public consultation on draft Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS) designed to clarify the composition of the new business indicator integral to the operational risk capital requirements calculation. This consultation, part of the EU Banking Package implementation, is open until 21 May 2024.

The draft RTS specifies typical items for each component of the business indicator, aligning with EBA policy advice on Basel III Reform and subsequent accounting standard amendments. They also outline elements to be excluded from the business indicator. Additionally, the draft ITS maps typical items of the business indicator to corresponding reporting cells in FINREP, enhancing reporting consistency.

In parallel, the EBA is consulting on adjustments to the business indicator, requiring institutions to utilise historical data or alternative methodologies, particularly in operations such as mergers, acquisitions, and disposals.

Stakeholders are invited to provide feedback, which will inform the finalisation of these technical standards. A quantitative analysis, based on data from the Basel III monitoring quantitative impact study, will assess the impact of proposed amendments and calibrate certain aspects of the new framework.

A public hearing via webinar is scheduled for 20 March 2024, providing an opportunity for further engagement and explanation.

For more details and to participate in the consultation, visit the EBA website.

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