EBA · 2024_7123 Rejected question

Calculation of 3 year indicator at consolidated level when solo entities contribute negatively to group indicator

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
315, para. 4
Topic
Operational risk
Submitted by
Credit institution
Submitted
2024-06-25
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Question

How to report RWA for entities that have negative values and contribute negatively to the Group RWA?

Background

The BIA calculation on group level is based on the Q&A with ID 2018_3772: “In the minimum regulatory capital calculation, it has to be differentiated between the calculation on legal entity level and the calculation on group level. […] Therefore, if at consolidated level, the “negative” years of solo entities affect the income statement by reducing the total figure, these negative years have to be included (that is, deducted) within the total figure.” Consolidated (on Group level) operational risk RWA consists of entities increasing as well as reducing the total figure, we currently report their positive and negative contributions. Some reports contain both Group as well as local figures: if there is the need to floor entities with negative RWA to EUR 0, then the sum of entities’ RWA won’t match the Group RWA figure. Example: Current Reporting: Group RWA = 10 Entity 1 contribution to Group RWA = 2 Entity 1 contribution to Group RWA = 5 Entity 1 contribution to Group RWA = -3 Entity 1 contribution to Group RWA = 6 Total RWA = 10   BIA floored: Group RWA = 10 Entity 1 contribution to Group RWA = 2 Entity 1 contribution to Group RWA = 5 Entity 1 contribution to Group RWA = 0 Entity 1 contribution to Group RWA = 6 Total RWA = 13
No answer published yet.

Original source: European Banking Authority, Q&A ID 2024_7123

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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