Chinese megabanks set to lose out in switch to SMA

Bank of China, ICBC likely to see lower reductions in operational risk capital due to reliance on interest income

Photo of ICBC and BoC
Bank of China and ICBC: two of China’s Big Four banks with SMA concerns
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China’s four megabanks are set to be among the losers from the switch to a new method of calculating operational risk capital, due to the approach’s comparatively punitive treatment of banks that rely on interest income to generate revenue.

While some of the world’s largest banks are in line for an estimated 30% drop in operational risk capital requirements under the new approach, according to a quantitative impact study, China’s ‘Big Four’ are expected to see smaller reductions.

“[That reduct

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