WASHINGTON — The Basel Committee on Banking Supervision released its latest consultative document on Friday laying out new metrics to be included in a future "dashboard" of bank prudential positions, including ones for market, operational and counterparty credit risk.
The document builds on the committee's co-called Pillar III disclosure requirements, which were first proposed in the Basel II accords in 2004 but were revised and updated as part of the Basel III accords in 2010. In June 2014 the committee proposed requiring banks to submit data according to specific standards in order to give regulators and the public a "dashboard" of comparable metrics for a variety of risks. The committee issued its revised Pillar III requirements in January 2015, and Friday's consultative document expands on the specific metrics to be included in the proposal.
The paper calls for banks to submit data for "hypothetical risk-weighted assets calculated according to the standardized approaches for market risk, counterparty credit risk and the securitization framework," as well as metrics to measure capital and debt "arising from the total loss-absorbing capacity (TLAC) regime for global systemically important banks (G-SIBs)" and operational risks.
The document is open for comment through June 10.
The document comes as the Basel Committee on March 4 issued a consultative document laying out a standardized approach toward quantifying operational risk — a somewhat nebulous term that can encompass risks ranging from natural disasters to cybercrime. That document proposes to combine an existing metric for operational risk, known as the Business Indicator, with bank-specific operational loss data, including historical loss experience data. The proposal is open for public comment through June 3.
This article was written by John Heltman from American Banker. This reprint is supplied by BNY Mellon under license from NewsCred, Inc.
BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may be used as a generic term to reference the corporation as a whole and/or its various subsidiaries generally. This material does not constitute a recommendation by BNY Mellon of any kind. The information herein is not intended to provide tax, legal, investment, accounting, financial or other professional advice on any matter, and should not be used or relied upon as such. The views expressed within this material are those of the contributors and not necessarily those of BNY Mellon. BNY Mellon has not independently verified the information contained in this material and makes no representation as to the accuracy, completeness, timeliness, merchantability or fitness for a specific purpose of the information provided in this material. BNY Mellon assumes no direct or consequential liability for any errors in or reliance upon this material.