What the banking industry (and others) told the Basel regulators

The Central Bank of the United Arab Emirates said the op risk capital charge may be left to the discretion of the national supervisor, and should be based not only on quantitative factors, but should take account of qualitative factors. The Central Bank of Sri Lanka said the basic indicator and standardised approaches seemed inconsistent with the main objective of Basel II, namely the enhancing of competitive equality with the more risk-sensitive capital requirements. The bank suggested the capital charge for op risk be specified by the supervisor based on supervisory review under pillar two of Basel II.

The Central Bank of Malta noted reputational risk was not included in the Basel II definition. Although difficult to measure, reputational risk could have significant adverse effects which far outweigh the actual losses arising from operational risk and this should not be ignored.

The Bank of Thailand said since Basel II defines operational risk to include legal risk, the definition should be sufficiently clear to prevent any additional capital charge arising from difficulties in