The EBA publishes key regulatory products on operational risk capital requirements and related supervisory reporting

The European Banking Authority (EBA) today published three final draft technical standards that are crucial for the implementation of the EU Banking Package and will allow supervisors to monitor institutions’ compliance, thus fostering consistent and enhanced supervision.

In particular, the EBA is publishing the following Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS):

• RTS concerning the calculation and adjustments of the Business Indicator (BI), which is central to the standardised and harmonised application of the operational risk capital requirements.
• ITS on the mapping to FINREP, which will ensure consistency and reduce implementation, administrative and operational costs.
• Amending ITS on operational risk reporting, which will keep the supervisory reporting framework relevant, meaningful and aligned with the amended regulation.

The EBA has refined the BI components, incorporating updates to accounting standards, detailed breakdowns of operational risk impacts and exclusions, as well as further clarifications on the approaches for calculating the financial component. These changes ensure comprehensive and accurate representation of operational risk in banks' financial statements.

When an institution undergoes a merger or acquisition, the final RTS mandate the use of actual three-year historical data or provide alternative methodologies if this is not feasible. For disposals, the final RTS outline conditions for excluding BI items related to disposed entities, while a materiality threshold for disposals is introduced, allowing adjustments without supervisory permission for minor disposals. This ensures clarity for institutions with frequent, low-impact disposals.

The standard items for each component of the BI were matched to their respective reporting cells in FINREP, with the outcome being presented in the final ITS on BI mapping.

The final report on supervisory reporting introduces amendments to the operational risk reporting framework, aimed at assessing compliance with operational risk own funds requirements. It enhances existing reporting requirements by requesting additional details on the calculation of business indicator components. This ensures that supervisory authorities have access to essential data to fulfill their mandates, while also considering the effort required by institutions to meet these data requirements.

Legal basis and background

These mandates are part of the Phase 2 of the EBA roadmap on the implementation of the EU Banking Package.

Article 314(9)(a) and (b) of Regulation (EU) No 575/2013 (Capital Requirements Regulation, CRR), mandates the EBA to develop draft RTS to further specify the components of the BI by developing a list of items and the elements to be excluded from the BI, respectively. Article 314(10) of the CRR, mandates the EBA to develop draft ITS to provide the mapping of the items of the BI to the corresponding reporting cells in Commission Implementing Regulation (EU) 2021/451 (FINREP). Article 315(3) of the CRR3 mandates the EBA to draft RTS to specify “how institutions shall determine the adjustments to the business indicator” (point (a) of Article 315(3) referencing mergers, acquisitions and disposals), “the conditions according to which competent authorities may grant the permission” and “the timing of the adjustments” (points (b) and (c) of Article 315(3) referencing disposals only).

Regulation (EU) No 575/2013 (‘the CRR’) as amended by Regulation (EU) 2024/1623 (‘CRR 3’) mandates the EBA, in article 430(7), to develop draft implementing technical standards to specify uniform reporting formats, and IT solutions, including instructions, for supervisory reporting requirements of institutions.

Next steps

After the submission of the final draft ITS to the Commission for adoption, the EBA will publish on the website the IT tools, including binding instructions. The EBA will publish during Q4 2025 a technical package, including the DPM, validation rules and taxonomy, that shall be used by institutions to submit this supervisory reporting information to supervisors. The first applicable reference date for reporting under the draft ITS is 31 March 2026.

An updated version of the mapping tool between supervisory reporting and disclosure requirements for Operational risk will be published soon.