Related to validation V5836_M.

Possibility of consider operational risk errors with positive P/L impact in the C17 state if they have the same origin that other with negative P/L impact that are included.

In order to complete the C 17.00 state, and referring to the “execution, delivery, and process…” risk category, we take into account the cash unbalances as part of the operational events.

The cash unbalances could cause a loss (negative unbalance) or a profit (positive unbalance). In order to offer a complete economic view of our operational risk, we have always considered both kind of unbalances in our management and regulatory reporting, because they are caused or originated in the same processes, operations, and conditions. It’s important to explain that positive unbalances are not recuperations, they are the result of an operational error (similar to the negative ones), but with a positive cash consequence.

Taking into account the positive unbalances has triggered a non-restrictive error in the C17 validations, because the total amount of the positive unbalances is included in the total amount of losses of the category. In consequence, the total amount of losses is smaller than the addition of the buckets (10k-20k, 20k-100k, 100k-1M, >1M), given that this buckets only include the negative unbalances (the positive have a minus sign).