Tweaks to op risk in Basel II in pipeline

The Basel Committee on Banking Supervision announced in mid-May that it would delay the implementation of the advanced measurement approach (AMA) for op risk, as well as the advanced internal ratings-based approach for credit risk, until the end of 2007. The basic indicator and standardised approaches (BIA and STA) will, however, remain scheduled for implementation at the end of 2006.

The announcement, Consensus achieved on Basel II proposals, also provided further discussion of how the home-host principle would apply to op risk.

Other changes are in store for op risk, according to a source close to the Basel Comittee. New text on the treatment of negative gross income under BIA and STA will be among the changes. The problem will be discussed in various committees between now and the proposed publication date at the end of June. Because the BIA and STA calculate the op

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