The EU Banking Package is set to enable supervisors to oversee institutions’ compliance, in turn facilitating consistent and increased supervision.
RTS regarding the calculation and adjustment of the Business Indicator (BI), which supports the standardised and harmonised application of the operational risk capital requirements;
ITS on the mapping to FINREP, which is set to ensure consistency and minimise implementation, administrative, and operational costs;
Amending the ITS on operational risk reporting, which will maintain the supervisory reporting framework relevant and aligned with the amended regulation.
Additionally, the EBA has upgraded the BI components, integrating updates to accounting standards, detailed breakdowns of operational risk impacts and exclusions, and further clarifications on the approaches for calculating the financial component. With these changes, the regulator seeks to ensure a comprehensive and accurate representation of operational risk in banks’ financial statements.
Furthermore, regarding an institution’s process of undergoing a merger or acquisition, the final RTS mandates the use of actual three-year historical data or offers alternative methodologies if not practical. When it comes to disposals, the final RTS includes conditions for excluding BI items related to disposed entities. Also, a materiality threshold for disposals is introduced, enabling adjustments without supervisory permission for minor disposals. The EBA aims to ensure clarity for institutions with frequent, low-impact disposals.
The newly published standard items for each component of the BI were matched to their respective reporting cells in FINREP. The outcome was presented in the final ITS on BI mapping.
Moreover, the EBA’s final report on supervisory reporting provides amendments to the operational risk reporting framework focused on assessing compliance with operational risk own funds demands. It seeks to improve existing reporting requirements by asking for more details on the calculation of business indicator components. Through this, supervisory authorities are set to be able to access essential data to fulfil their mandates, taking into account the effort required by institutions to meet these data standards.
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