Basel III op risk method a stronger guard against losses – EBA

Number and size of op risk loss overshoots relative to capital would have been lower under new standardised approach

The fully-loaded version of the Basel III operational risk framework would have done a better job of covering actual losses incurred by European banks than the current regime, a regulatory study shows.

Using data from 146 banks, the European Banking Authority found that net losses overshot present op risk required capital on 10 occasions between 2015 and 2017. Had the incoming Basel III rules been in force, there would have been just three such overshoots.

The EBA also found that a watered

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