EBA欧洲银行-CP21_ABI-and-DIPO_11页_139kb

Summary of the Position Paper on CP 21 - CEBS's Compendium of Supplementary Guidelines on Implementation Issues of Operational Risk

Introduction

The Italian banking industry, represented by the Italian Banking Association (ABI) and the DIPO Consortium, supports the CEBS initiative to address implementation issues of operational risk. DIPO, with 35 members and 193 legal entities reporting data, represents 42% of the Italian banking system in terms of number and 80% in terms of operational costs. The position paper outlines specific comments and proposals on the CEBS consultation paper (CP21) to enhance clarity and practicality in operational risk management.

Core Content and Main Views

1. Scope of Operational Risk and Event Triggering

• Gross Actual Total Loss Definition: Losses should be defined as negative income flows with a minimum threshold of €5,000. The loss amount must be certain and traceable to specific events.
• Exclusion of Pending Losses: Pending losses, including transitory and suspense accounts, should be excluded from operational risk loss calculations due to operational sustainability and double-counting issues.
• Timing Impacts: All timing impacts should be excluded from the Capital Adequacy Ratio (CaR) calculation, as they are not true operational risk losses but accounting adjustments.

2. Operational Risk vs. Other Risks

• Operational Risk vs. Reputational Risk: Reputational risk is explicitly excluded from operational risk.
• Operational Risk vs. Market Risk: It is not practicable to separate the impact of adverse market conditions from operational events. The guidance should be more specific.
• Operational Risk vs. Strategic Risk:
  • Compensation to Employees: Should not be included in operational risk unless it is a result of an event that led to customer refunds.
  • Customer Refunds: These should be considered strategic risk only if they are not due to breaches of rules or ethical conduct.
  • Strategic Risk Definition: Clarification is needed to distinguish strategic risk from operational risk. Strategic risk includes decisions not in line with the firm's risk tolerance and core activities, but not those resulting from breaches.

3. Legal Risk Clarifications

• Legal Risk Definition: Legal risk includes court actions where the bank is a defendant and actions to recover operational losses where the bank is a plaintiff.
• Gross Actual Loss Calculation:
  • Includes interests and external legal costs.
  • Excludes internal legal costs and cost compensations.
  • The event remains open until a definitive verdict is reached.
  • Legal costs are only external and should not be adjusted for IAS purposes.

4. Cross-Border Losses with Credit Risk

• Inclusion in Dataset: Cross-border operational losses with credit risk should be included in the dataset for operational risk calculation, provided they are recorded by DIPO partners.
• Consistent Treatment: Banks should apply consistent preventive and mitigation measures for cross-border risks and ensure that all losses are captured without improper reductions in capital requirements.

Key Information

• DIPO's Role: DIPO serves as a database for operational risk losses and is a key player in the Italian banking industry.
• Data Collection and Reporting: The data should be a 'stock' measure, not a 'flow', and reported cumulatively. It should be valued in Euros without decimals.
• Alignment with Supervisory Convergence: The paper emphasizes the importance of reducing supervisory burden for cross-border banks and aligning with broader market integration goals.

Recommendations

• Clarify Definitions: Improve clarity on operational risk versus market and strategic risk.
• Exclude Pending Losses: Remove pending losses from operational risk loss scope.
• Define Strategic Risk Subcategories: Clearly distinguish between business risk and 'pure' strategic risk.
• Refine Legal Risk Treatment: Ensure legal costs are only external and include appropriate guidance on the reporting of legal proceedings.
• Ensure Consistency in Cross-Border Risk Management: Maintain consistency in the treatment of cross-border losses and align with the principles of the Structural Surveillance Provisions.

This summary reflects the key elements and recommendations of the position paper, aimed at improving the clarity and practical application of operational risk guidelines.