Instruction No. 17/2016 of August 8 on the Provision of Information Regarding Regulatory Capital Requirements for Operational Risk

INSTRUCTION NO. 17/2016 of August 8
SUBJECT: PROVISION OF INFORMATION REGARDING REGULATORY CAPITAL REQUIREMENTS FOR OPERATIONAL RISK

Given the need to regulate the submission of information to the Bank of Angola by Financial Institutions, within the scope of the provisions contained in Notice No. 05/2016 of June 22, regarding regulatory capital requirements for operational risk;

Under these terms, pursuant to the combined provisions of letters d) and f) of paragraph 1 of Article 21 and letter d) of paragraph 1 of Article 51, both of Law No. 16/10 of July 15 – Law of the Bank of Angola, and Article 88 of Law No. 12/15 of June 17 – Basic Law of Financial Institutions;

I DETERMINE:

1. Provision of operational risk information
   1.1 Financial Institutions must provide information regarding the provisions of Article 4 of Notice No. 05/2016 of June 22, regarding regulatory capital requirements for operational risk, on an individual basis, monthly, and on a consolidated basis, quarterly, using for this purpose the forms and filling notes attached to this Instruction.
   1.2 Without prejudice to the provision of information on an individual basis, the parent company of the financial group must submit the information provided for in this Instruction on a consolidated basis, according to the consolidation perimeter provided for in Notice No. 03/2013 of April 22, regarding prudential supervision on a consolidated basis.
   1.3 Institutions that, due to the nature of their activity, do not have information to provide in any of the forms, must declare this fact through the forms attached to this Instruction.
   1.4 Institutions must, at any time, be in a position to justify the information submitted, through supporting documentation.

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2. Sanctions
   Non-compliance with the mandatory norms established in this Instruction constitutes an offense punishable under the terms of the Basic Law of Financial Institutions.

3. Transitional provisions
   Institutions must comply with the provisions of this Instruction in accordance with the transitional provisions of Notice No. 02/2016 of June 15, regarding regulatory capital.

4. Doubts and omissions
   Doubts and omissions that arise in the interpretation and application of this Instruction will be resolved by the Bank of Angola.

5. Entry into force
   This Instruction enters into force on the date of its publication.

PUBLISH
Luanda, on August 8, 2016
THE GOVERNOR
VALTER FILIPE DUARTE DA SILVA

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ANNEX I
Filling notes for the form of Regulatory Capital Requirement for coverage of operational risk

1. Model applicable to Institutions that calculate the regulatory capital requirement for coverage of operational risk according to the methods provided for in Instruction No. 16/2016, regarding calculation and regulatory capital requirement for operational risk.
2. The information submission form must be filled in accordance with the provisions of Instruction No. 16/2016, regarding calculation and regulatory capital requirement for operational risk, namely:
   a) for the Basic Indicator Method, according to the parameters established in Annex I; b) for the Standard Method, according to the provisions of Annex II; and c) for the Alternative Standard Method, according to the terms provided for in Annex III.
3. Both the annual exposure indicator and the alternative exposure indicator are determined on an annual basis and submitted at the end of the financial year, according to the provisions in Annexes I and III, respectively, both of Instruction No. 16/2016, regarding calculation and regulatory capital requirement for operational risk. Thus, in the provision of information relating to December 31 of each year, "Year n" should be understood as the value of the indicator relating to the fiscal year ended on that date, "Year n-1" as the preceding year, and "Year n-2" as two fiscal years prior to the current one submitted. The values of the aforementioned indicators, despite being submitted quarterly on an individual level and semi-annually on a consolidated level, are only updated annually.

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ANNEX II
Filling notes for the "Operational Risk Information" form

1. Model applicable to Institutions that calculate the regulatory capital requirement for coverage of operational risk according to the Standard Method or Alternative Standard Method, provided for in Instruction No. 16/2016, regarding calculation and regulatory capital requirement for operational risk.
2. For each activity segment, record the number of events resulting from each of the seven types of operational risk events. If an operational risk event has an impact on more than one activity segment, it must be recorded in the respective segments.
3. For each activity segment, record the amount of losses resulting from each of the seven types of operational risk events.
4. For each activity segment, record the maximum single loss amount recorded in each of the seven types of operational risk events, considering possible distribution of operational risk events across more than one activity segment.
5. The aggregated number of events for each of the seven types of operational risk events must correspond to the total number of events recorded in each of the activity segments, except in cases where an operational risk event has been recorded in more than one segment, as that event should only be counted once.
6. The aggregated value of losses for each of the seven types of operational risk events corresponds to the total amounts recorded in each of the activity segments.
7. The maximum single loss for each of the seven types of operational risk events must correspond to the maximum individual loss recorded in one of the activity segments, except in cases where the event with the maximum single loss has been recorded in more than one activity segment.

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8. Regarding aggregation by activity segment, the values to be presented correspond to the aggregated value of the number of events and the amounts recorded in each of the columns referring to the seven types of operational risk events. Regarding the maximum single loss, the value of the largest individual loss determined in the activity segment must be recorded, and therefore it refers to a single type of operational risk event.

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ANNEX III
Information submission form regarding regulatory capital requirement for coverage of operational risk

Institution Name: Reporting Base: Year: Month:
Year n-2 Year n-1 Year n Year n-2 Year n-1 Year n Total

1. Total of activities subject to the Basic Indicator Method (2a) 0.0
2. Total of activities subject to the Standard Method (2b) 0.0
   2.1 Corporate Finance 0.0
   2.2 Trading and Sales 0.0
   2.3 Payment and Settlement 0.0
   2.4 Commercial Banking 0.0
   2.5 Agency Services 0.0
   2.6 Retail Banking 0.0
   2.7 Retail Portfolio Intermediation 0.0
   2.8 Asset Management 0.0
3. Total of activities subject to the Alternative Standard Method (2c) N/A
   3.1 Retail Banking and Commercial Banking 0.0
   3.2 Other segments 0.0
   Activities
   Exposure indicator or alternative exposure indicator (3) Regulatory capital requirement

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Institution Name: Reporting Base: Year: Month:
Internal Fraud External Fraud
Employment Practices and Workplace Safety Client, Product and Business Practices Physical Asset Damage Business Disruption and System Failures Execution, Delivery and Process Management Number of events (2) 0.0 Total loss amount (3) 0.0 Maximum single loss Number of events 0.0 Total loss amount 0.0 Maximum single loss Number of events 0.0 Total loss amount 0.0 Maximum single loss Number of events 0.0 Total loss amount 0.0 Maximum single loss Number of events 0.0 Total loss amount 0.0 Maximum single loss Number of events 0.0 Total loss amount 0.0 Maximum single loss Number of events 0.0 Total loss amount 0.0 Maximum single loss Number of events (5) Total loss amount (6) 0.0 Maximum single loss (7) Sum by type of operational risk event Commercial Banking Agency Services Retail Banking Trading and Sales Payment and Settlement Intermediation (retail portfolio) Asset Management Corporate Finance Type of Operational Risk Event Sum by activity segment (8) Allocation of losses to activity segments

ANNEX VI
Information submission form regarding operational risk