Regulatory Alerts2019-01-01
Conversion Factor for Operational Risk Capital Charge Computation
The Bank of Tanzania clarifies that the effective date for applying a revised 8.33 conversion factor to operational and market risk capital charges is 31 December 2018. This directive resolves an omission in a February 2019 relief letter by explicitly establishing the retroactive implementation date for all licensed banks and financial institutions. The clarification ensures consistent capital charge computations across the Tanzanian financial sector without requiring additional regulatory approvals.
BENKI KUU YA TANZANIA 2 MIRAMBO STREET 11884 DAR ES SALAAM TANZANIA Simu ya Mdomo: +255-22 2234494/5/7 +255-22-2235531 Anuani ya Simu: “BENKUU” Kumbukumbu Ref. No. BANK OF TANZANIA 2 MIRAMBO STREET 11884 DAR ES SALAAM TANZANIA Phone: +255-22-2234494/5/7 Direct Line: +255-22-2235531 Fax No: +255-22-2234189 CABLE: “BENKUU” FA.42/53/01/8 28th March 2019 The Executive Director, Tanzania Bankers Association Limited, 4th Floor, Sukari House, Ohio/Sokoine Drive, P. O. BOX 70925 DAR ES SALAAM RE: CONVERSION FACTOR FOR OPERATIONAL RISK CAPITAL CHARGE COMPUTATION This has reference to our letter number FA.42/53/01/7 dated 26th February 2019, regarding captioned subject. In the said letter, Bank of Tanzania exceptionally granted relief to use conversion factor of 8.33 when converting capital charge for market and operational risks to notional risk weighted assets. However, the letter did not indicate the effective date for using the revised conversion factor. In that regard, the Bank wishes to clarify that the effective date for using the revised conversion factor of 8.33 is 31st December 2018. Please be informed accordingly. Yours faithfully, BANK OF TANZANIA DIRECTORATE OF FINANCIAL SECTOR SUPERVISION Cc: All Banks and Financial Institutions