Question ID
2024_7123
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Operational risk
Article
315
Paragraph
4
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
n/a
Type of submitter
Credit institution
Subject matter
Calculation of 3 year indicator at consolidated level when solo entities contribute negatively to group indicator
Question

How to report RWA for entities that have negative values and contribute negatively to the Group RWA?

Background on the question

The BIA calculation on group level is based on the Q&A with ID 2018_3772:

“In the minimum regulatory capital calculation, it has to be differentiated between the calculation on legal entity level and the calculation on group level. […]

Therefore, if at consolidated level, the “negative” years of solo entities affect the income statement by reducing the total figure, these negative years have to be included (that is, deducted) within the total figure.”

Consolidated (on Group level) operational risk RWA consists of entities increasing as well as reducing the total figure, we currently report their positive and negative contributions.

Some reports contain both Group as well as local figures: if there is the need to floor entities with negative RWA to EUR 0, then the sum of entities’ RWA won’t match the Group RWA figure.

Example:

Current Reporting:

Group RWA = 10

Entity 1 contribution to Group RWA = 2

Entity 1 contribution to Group RWA = 5

Entity 1 contribution to Group RWA = -3

Entity 1 contribution to Group RWA = 6

Total RWA = 10

 

BIA floored:

Group RWA = 10

Entity 1 contribution to Group RWA = 2

Entity 1 contribution to Group RWA = 5

Entity 1 contribution to Group RWA = 0

Entity 1 contribution to Group RWA = 6

Total RWA = 13

Submission date
Rejected publishing date
Rationale for rejection

This question has been rejected because it is considered that EBA guidance or clarification is not needed with regard to the issue that it raises. For example, this can be the case where it is considered that the existing regulatory framework is sufficiently clear and unambiguous, or where different practices may be possible but it is not currently necessary to harmonise these further through the Q&A process.

The Single Rule Book Q&A tool has been established to provide explanations and non-binding interpretations on questions relating to the practical application or implementation of the provisions of legislative acts referred to in Article 1(2) of the EBA’s founding Regulation, as well as associated delegated and implementing acts, and guidelines and recommendations, adopted under these legislative acts.

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Status
Rejected question