UK opposed to allowing wider op-risk insurance role in European capital rules

LONDON – UK regulators are opposed to the wider use of operational risk insurance to reduce capital charges under complex new European Union (EU) safety rules for banks and investment firms, regulatory sources said.

The European Commission, the EU's executive body, yesterday said it would consider the use of insurance to reduce capital charges against operational risk under all three op-risk approaches, from the simplest to the most complex, in rules it wants to bring into force in late 2006.

The commission's proposals are in effect the way that the risk-based Basel II bank safety rules will be applied in the EU, which currently has 15 member states but by 2006 is likely to have 25.

The commission's

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