The European Banking Authority (EBA) has recently published three final draft technical standards for the implementation of the EU Banking Package.

Key Regulatory Products

• The EBA has released Regulatory Technical Standards (RTS) related to the calculation and adjustment of the Business Indicator (BI), supporting standardised and harmonised application of operational risk capital requirements.
• An Implementing Technical Standard (ITS) on mapping to FINREP is now available, ensuring consistency and reducing implementation, administrative, and operational costs.
• The EBA has also amended the ITS on operational risk reporting to keep the supervisory reporting framework relevant and aligned with the amended regulation.

The BI components have been updated with new accounting standards, detailed breakdowns of operational risk impacts and exclusions, and further clarifications on approaches for calculating the financial component. The aim is to ensure a comprehensive and accurate representation of operational risk in banks’ financial statements.

For institutions undergoing mergers or acquisitions, the final RTS requires the use of actual three-year historical data or alternative methodologies if practical. For disposals, the final RTS includes conditions for excluding BI items related to disposed entities and introduces a materiality threshold for disposals, allowing minor adjustments without supervisory permission.

The new standard items for each component of the BI have been matched with their respective reporting cells in FINREP. The outcome is presented in the final ITS on BI mapping.

Moreover, the EBA’s final report on supervisory reporting provides amendments to the operational risk reporting framework focused on assessing compliance with operational risk own funds demands. It seeks to improve existing reporting requirements by asking for more details on the calculation of business indicator components, enabling supervisory authorities to access essential data for fulfilling their mandates while considering the effort required by institutions to meet these data standards.