EBA · 2019_5037 Rejected question

Calculation of the 3 year indicator at consolidated level when figures for individual subsidiaries are negative

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
317, para. 3
Topic
Operational risk
Submitted by
Credit institution
Submitted
2019-12-10
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Question

When applying prudential consolidation under the Standardised Approach, does Article 317(3) CRR apply to the indicator on a consolidated level?

Background

If for example the parent entity has a positive relevant indicator for each of the 3 years but the subsidiary has two years with negative relevant indicator, it is unclear whether Article 317(3) CRR is applicable at the consolidated level, i.e the negative balances of the subsidiary can be offset with the positive figures of the parent entity (but in any case the net result should be floored to zero) in the corresponding years. It is clear that for the solo calculations of the individual subsidiary no negative numbers can be used. But the question is whether the negative values of the subsidiaries can be offset with the positive relevant indicator of the parent and/or other subsidiaries of a Group at the consolidated level i.e when calculating the capital requirements for the Group.
No answer published yet.

Original source: European Banking Authority, Q&A ID 2019_5037

This Q&A is published by European Banking Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

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