Revised SMA could allow banks to ignore past op risk losses

Leaked proposals say loss component will be left to national regulators, threatening an unlevel playing field

Sweep under the rug
Swept under the rug: past losses could be conveniently forgotten

The Basel Committee’s proposed revisions to the standardised measurement approach (SMA) for operational risk capital will give national regulators the freedom to let banks ignore past op risk losses when implementing the framework, has learned.

If adopted as proposed, the revised approach would likely result in significantly lower than expected increases in operational risk capital versus the committee’s initial SMA proposal from March 2016 – which could have led to a 75% increase in P

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