Inclusion of legal losses in op risk databases has banks fretting
Banks worry Basel rules requiring legal events to be included in operational risk databases earlier might mean the information is used against them in legal proceedings
Language in a recent paper from the Basel Committee on Banking Supervision, which requires banks to include legal events in their internal operational risk loss databases at the same time they establish a legal reserve, has caused consternation among banks, at a time when legal woes are prompting investors to question capital levels.
Banks fear their attempts to improve operational risk management
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