Changes from report parliamentary committee draft to plenary report

Added2. For the purposes of paragraph 1, the interest, leases and dividend component shall be calculated in accordance with the following formula:

Addedwhere:

AddedILDC = the interest, leases and dividend component;

AddedIC = the interest component, determined at jurisdiction level for the purpose of taking into consideration high and low net interest margin jurisdictions which is the institution’s interest income from all financial assets and other interest income, including finance income from financial leases and income from operating leases and profits from leased assets, minus the institution’s interest expenses from all financial liabilities and other interest expenses, including interest expense from financial and operating leases, depreciation and impairment of, and losses from, operating leased assets, calculated as the annual average of the absolute values of the differences over the previous three financial years;

AddedAC = the asset component, determined at jurisdiction level for the purposes of taking into consideration high and low net interest margin jurisdictions which is the sum of the institution’s total gross outstanding loans, advances, interest bearing securities, including government bonds, and lease assets, calculated as the annual average over the previous three financial years on the basis of the amounts at the end of each of the respective financial years;

AddedDC = the dividend component, which is the institution’s dividend income from investments in stocks and funds not consolidated in the financial statements of the institution, including dividend income from non-consolidated subsidiaries, associates and joint ventures, calculated as the annual average over the previous three financial years.

Added3. For the purposes of paragraph 1, the services component shall be calculated in accordance with the following formula:

Addedwhere:

AddedSC = the services component;

AddedOI = the other operating income, which is the annual average over the previous three financial years of the institution’s income from ordinary banking operations not included in other items of the business indicator but of similar nature;

AddedOE = the other operating expenses, which is the annual average over the previous three financial years of the institution’s expenses and losses from ordinary banking operations not included in other items of the business indicator but of similar nature, and from operational risk events;

AddedFI = the fee and commission income component, which is the annual average over the previous three financial years of the institution’s income received from providing advice and services, including income received by the institution as an outsourcer of financial services;

AddedFE = the fee and commission expenses component, which is the annual average over the previous three financial years of the institution’s expenses paid for receiving advice and services, including outsourcing fees paid by the institution for the supply of financial services, but excluding outsourcing fees paid for the supply of non-financial services.

Added3a. Subject to the prior permission of the competent authority, and to the extent that the institutional protection scheme disposes of suitable and uniformly stipulated systems for the monitoring and classification of operational risks, institutions that are members of an institutional protection scheme meeting the requirements of Article 113(7) may calculate the SC net of any income received from or expenses paid to institutions, that are members of the same institutional protection scheme.

AddedAny financial consequence resulting from the related operational risks is subject to mutualisation across institutional protection scheme members.

Added4. For the purposes of paragraph 1, the financial component shall be calculated in accordance with the following formula:

Addedwhere:

AddedFC = the financial component;

AddedTC = the trading book component, which is the annual average of the absolute values over the previous three financial years of the net profit or loss, as applicable, on the institution’s trading book, including on trading assets and trading liabilities, from hedge accounting, and from exchange differences;

AddedBC = the banking book component, which is the annual average of the absolute values over the previous three financial years of the net profit or loss, as applicable, on the institution’s banking book, including on financial assets and liabilities measured at fair value through profit and loss, from hedge accounting, from exchange differences, and realised gains and losses on financial assets and liabilities not measured at fair value through profit and loss.

Added5. Institutions shall not use any of the following elements in the calculation of their business indicator:

Added(a) income and expenses from insurance or reinsurance businesses;

Added(b) premiums paid and payments received from insurance or reinsurance policies purchased;

Added(c) administrative expenses, including staff expenses, outsourcing fees paid for the supply of non-financial services, and other administrative expenses;

Added(d) recovery of administrative expenses including recovery of payments on behalf of customers;

Added(e) expenses of premises and fixed assets, except where those expenses result from operational risk events;

Added(f) depreciation of tangible assets and amortisation of intangible assets, except the depreciation related to operating lease assets, which shall be included in financial and operating lease expenses;

Added(g) provisions and reversal of provisions, except where those provisions relate to operational risk events;

Added(h) expenses due to share capital repayable on demand;

Added(i) impairment and reversal of impairment;

Added(j) changes in goodwill recognised in profit or loss;

Added(k) corporate income tax.

Added6. EBA shall develop draft regulatory technical standards to specify the following:

Added(a) the components of the business indicator by developing a list of typical sub-items, taking into account international regulatory standards; for the Financial Component calculation, that list shall not be used to separate TC and BC components and shall not prevent an institution from addressing sub-items to the TC or the BC components according to their prudential boundary defined in Part three, Title I, Chapter 3;

Added(b) the elements listed in paragraph 5.

AddedEBA shall submit those draft regulatory technical standards to the Commission by [OP please insert the date = 18 months after entry into force of this Regulation].

AddedPower is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.

Added7. EBA shall develop draft implementing technical standards to specify the items of the business indicator by mapping those items with the reporting cells concerned set out in Commission Implementing Regulation (EU) 2021/451*5.

AddedEBA shall submit those draft implementing technical standards to the Commission by [OP please insert the date = 24 months after entry into force of this Regulation].

AddedPower is delegated to the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1093/2010.

Added1. Institutions shall include business indicator items of merged or acquired entities or activities in their business indicator calculation from the time of the merger or acquisition, as applicable, and shall cover the previous three financial years.

Added2. Institutions may request permission from the competent authority to exclude business indicator items related to disposed entities or activities from the calculation of their business indicator.

Added3. EBA shall develop draft regulatory technical standards to specify the following:

Added(a) how institutions shall determine the adjustments to the business indicator referred to in paragraph 1 and 2;

Added(b) the conditions according to which competent authorities may grant the permission referred to in paragraph 2;

Added(c) the timing of the adjustments referred to in paragraph 2.

AddedEBA shall submit those draft regulatory technical standards to the Commission by [OP please insert the date = 18 months after entry into force of this Regulation].

AddedPower is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.

Added1. Institutions with a business indicator equal to or exceeding EUR 750 million shall calculate annual operational risk losses as the sum of all net losses over a given financial year, calculated in accordance with Article 318(1), that are equal to or exceed the loss data thresholds set out in Article 319, paragraphs 1 or 2, respectively.

AddedBy way of derogation from the first subparagraph, competent authorities may grant a waiver from the requirement to calculate an annual operational risk loss to institutions with a business indictor that does not exceed EUR 1 billion, provided that the institution has demonstrated to the satisfaction of the competent authority that it would be unduly burdensome for the institution to apply the first subparagraph.

Added2. For the purposes of paragraph 1, the relevant business indicator shall be the highest value of the business indicator the institution has reported at the last eight reporting reference dates. An institution that has not yet reported its business indicator shall use its most recent business indicator.

Added3. EBA shall develop draft regulatory technical standards to specify the condition of ‘unduly burdensome’ for the purposes of the first paragraph.

AddedEBA shall submit those draft regulatory technical standards to the Commission by [OP please insert the date = 18 months after entry into force of this Regulation].

AddedPower is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.

Added1. Institutions that calculate annual operational risk losses in accordance with Article 316(1) shall have in place arrangements, processes and mechanisms to inform and maintain updated on an ongoing basis a loss data set compiling for each recorded operational risk event the gross loss amounts, non-insurance recoveries, insurance recoveries, reference dates and grouped losses, including those from misconduct events.

Added2. The institution’s loss data set shall capture all operational risk events stemming from all the entities that are part of the scope of consolidations pursuant to Part One, Title II, Chapter 2.

Added3. For the purpose of paragraph 1, institutions shall:

Added(a) include in the loss data set each operational risk event recorded during one or multiple financial years;

Added(b) use a date no later than the date of accounting for including losses related to operational risk events in the loss data set;

Added(c) allocate losses and related recoveries posted to the accounts over several years to the corresponding financial years of the loss data set, in line with their accounting treatment.