The EBA consults on the new framework for the business indicator for operational risk as part of the implementation of the EU Banking Package

The European Banking Authority (EBA) today launched a consultation on two set of draft Regulatory Technical Standards (RTS) and one Implementing Technical Standard aiming to clarify the composition of the new business indicator at the heart of the operational risk capital requirements calculation, mapping the business indicator items to financial reporting (FINREP) items and highlighting possible adjustments to the business indicator in case of specific operations. The consultation runs until 21 May 2024.

The draft RTS on the specification on the BI items provide a list of typical items developed for each component of the business indicator in line with the work provided in the EBA Policy Advice on the Basel III Reform. They also include subsequent amendments to accounting standards and clarify the elements to be excluded from the business indicator. The draft ITS map, where possible, the typical items of the business indicator to their corresponding reporting cells in FINREP. Finally, the draft RTS on BI adjustments require institutions to use the actual three-year historical data or a limited number of alternative methodologies following an operation. In the context of disposals, the draft RTS specify the conditions under which permission to exclude business indicator items related to disposed entities or activities may be granted.

In parallel with the public consultation, the EBA will carry out a quantitative analysis based on data requested as part of the Basel III monitoring quantitative impact study (QIS) to assess the impact of the proposed amendments, as well as to inform the calibration of certain aspects of the new framework. The feedback received and the QIS results will be taken into account in the finalisation of the draft technical standards.

In parallel, the EBA is also consulting on Pillar 3 and supervisory reporting to allow supervisors to monitor institutions’ compliance with the Basel III framework for operational risk.

Consultation process

Comments to this consultation can be sent to the EBA by clicking on the "Send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 21 May 2024. All contributions received will be published following the close of the consultation, unless requested otherwise.

A public hearing will take place in the form of a webinar on 20 March 2024, 10:00 – 13:00 CET. The EBA invites interested stakeholders to register using this link and entering the password Oprisk2024 by 18 March 2024, 16:00 CET. The dial-in details will be communicated to the registered participants after the registration deadline.

Legal basis and background

Article 314(6)(a) and (b) of Regulation (EU) No 575/2013 (Capital Requirements Regulation, CRR), mandates the EBA to develop draft RTS to further specify the components of the BI by developing a list of items and the elements to be excluded from the BI, respectively. Article 314(7) of the CRR, mandates the EBA to develop draft ITS to provide the mapping of the items of the BI to the corresponding reporting cells in Commission Implementing Regulation (EU) 2021/451 (FINREP). Article 315(3) of the CRR3 mandates the EBA to draft RTS to specify “how institutions shall determine the adjustments to the business indicator” (point (a) of Article 315(3) referencing mergers, acquisitions and disposals), “the conditions according to which competent authorities may grant the permission” and “the timing of the adjustments” (points (b) and (c) of Article 315(3) referencing disposals only).