Regulatory Alerts2021-05-12
Added · Updated
Completion Instructions for Return of Capital Adequacy Ratio Part V - Risk-weighted Amount for Operational Risk
Authorized institutions incorporated in Hong Kong must complete Form MA(BS)3(V) to calculate the risk-weighted amount for operational risk using the basic indicator approach (BIA), standardized approach (STO), or alternative standardized approach (ASA). The instructions specify that the BIA capital charge uses a 15% factor on average gross income, while the STO approach applies specific factors to eight standardized business lines and allows intra-year offsetting of positive and negative charges. Under the ASA approach, retail and commercial banking lines use loans and advances multiplied by 0.035 and a 12% or 15% factor, with the final risk-weighted amount derived by multiplying the capital charge by 12.5.
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