URY CB Operational Risk Rules

On Aug. 13, URY CB consulted on Basel III implementation draft law.

  • Consultation launched on draft law implementing Basel III re operational risk rules.
  • Follows Basel Dec. 2017 issued final text from Basel III reform package, see #36701.
  • Overview
  • Draft aims to amend art 172 of consolidated rules on regulation and control of financial system (CRRCFS) on the calculation of the capital requirement for operational risk.
  • Aligns law with international standard i.e. Basel III on post-crisis reforms of Dec 2017.
  • Key Aspects
  • It will replace basic indicator by business indicator, establishes capital requirement for operational risk for year t+ 1 of 12% of business indicator calculated at end of year t.
  • Level of exposure to operational risk of institution also based on financial statements, determined by adding interest component, services component, financial component.
  • Proposal includes formulas for calculation of mentioned components and details on some terms that should be calculated as average of three years: t, t-1 and t-2.
  • New annual information requirement as regards the capital for operational risk on individual and consolidated basis, form/template is also provided alongside draft law.
  • Basel standard includes in determination of requirement an internal loss multiplier.
  • As measure of operational risk materialization, for banks with business indicator less than/equal to €1000 mn, supervisors can choose to assign value of 1 to said multiplier.
  • Chosen option by Superintendence of Financial Services of URY CB, therefore, internal data on operational risk losses will not affect calculation of capital for said risk.
  • Effectiveness
  • Comments can be submitted until Sep. 5, 2019.

Regulators URY CB
Entity Types Bank; SIFI
Reference CP, PR, 8/13/2019; CRRCFS
Functions Compliance; Financial; Legal; Operations; Reporting; Risk; Treasury
Countries Uruguay
Products Banking; Corporate; Equity
Regions Am
Rule Type Proposed
Rule Date 8/13/2019
Effective Date 9/5/2019
Rule Id 63854
Linked to Rule :36701
Report Issue 8/15/2019
Report Section International

Last substantive update on 08/14/2019