Regulatory Alerts2022-07-11
Added · Updated
Completion Instructions for Return of Capital Adequacy Ratio Form MA(BS)3(V) - Risk-weighted Amount for Operational Risk
Authorized institutions incorporated in Hong Kong must use Form MA(BS)3(V) to calculate and report their risk-weighted amount for operational risk, defaulting to the basic indicator approach unless prior approval is granted for the standardized or alternative standardized approaches. The instructions specify calculation methodologies for each approach, including the use of a 15% capital charge factor for the basic indicator approach and specific factors for eight standardized business lines under the standardized approach. For the alternative standardized approach, loans and advances replace gross income for retail and commercial banking lines, multiplied by a fixed factor of 0.035 and applicable capital charge factors. Reporting requires aggregating data from the last three years, with specific rules for handling partial years of operation, negative gross income, and offsetting capital charges within a single year.
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