NBU postpones coverage by banks of 100% of operational risk for one year, decides to start with 50%
The National Bank of Ukraine (NBU), which announced at the end of 2019 that banks would represent 100% of the minimum operational risk in the capital adequacy ratio (H2) from the beginning of 2022, decided to introduce this requirement. in two stages, from 50%.
“The consideration of the minimum amount of operational risk when calculating capital adequacy ratios should be done using the following ratios: from December 31 of this year – 0.5, from December 30, 2022 – 1, “the regulator said in a report on Friday. .
The NBU said the changes were approved by Council Resolution No.121 dated November 18, 2021.
The National Bank said the decision was taken after discussions with the banking community, as well as taking into account the results of the NBU’s assessment of the stability of Ukraine’s banks and banking system in 2021, which indicate the sector’s ability to provide capital. 50% coverage of operational risk size, starting next year.
As indicated, the NBU, within the framework of the implementation of the requirements of European legislation and the recommendations of the Basel Committee on Banking Supervision of December 24, 2019, through resolutions No. 156-157, determined that the value capital adequacy will be calculated taking into account not only credit risk and open foreign exchange position, but also operational risk.
According to this approach, the size of the bank’s operational risk is determined by taking into account the size of its income and expenses linked to its core business. The income and expenses of the bank are divided into three components: an income / expense component net of interest and dividends, a services component and a financial component. At the same time, to calculate the volume of each of the three components, we take the average value of the last three years.
The central bank has established that banks will calculate the minimum operating risk once a year based on annual audited financial statements.
“New capital requirements will be phased in. The test calculations of the amount of operational risk will begin in 2020 after the publication of the 2019 annual accounts. Banks will be required to cover operational risk from January 1, 2022, ”said the National Bank. said at the time.
Operational risk is the probability of losses or additional losses or shortfalls in expected income due to deficiencies or errors in the organization of internal processes, deliberate or unintentional actions of bank employees, d ‘other people, failures in the bank’s information systems or as a result of external factors. Operational risk includes legal risk, but must exclude reputational risk and strategic risk.