Regulators not keen to define "significant" international subsidiary

It is highly unlikely that Basel II regulators will have a precise definition of a "significant international subsidiary" in order to make it easier for internationally active banking organisations to determine which of their subsidiaries can calculate their own Advanced Measurement Approach (AMA) operational risk capital requirements.

Addressing the Operational Risk USA 2004 Conference in New York yesterday, Eric Rosengren, the senior vice-president and chief discount officer at the Federal Reserve Bank of Boston, said the banking industry should not expect a precise definition of a “significant subsidiary” because there was still uncertainty about how large a bank must be to implement an effective AMA.

Rosengren also said that while many internationally active banks wanted to be able to allocate risk-based capital to

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