Banks Act, 1990 (Act No. 94 of 1990)

Regulations

Regulations relating to Banks

Chapter II : Financial, Risk-based and other related Returns and Instructions, Directives and Interpretations relating to the completion thereof

33. Operational risk: six-monthly return

Directives and interpretations for completion of six-monthly return concerning operational risk (Form BA 400)

Subregulations (1) to (6)

Purchase

(1)	The content of the relevant return is confidential and not available for inspection by the public.

(2)	The purpose of the return, amongst other things, is—

(a)	to provide a reconciliation between gross operating income reported in the form BA 120 and gross income used by a bank that adopted the basic indicator approach or standardised approach in order to calculate the bank's required amount of capital and reserve funds in respect of operational risk;

(b)	to calculate a bank's capital requirement in respect of operational risk.

(3)	For the measurement of a bank's exposure to operational risk, the bank shall, at the discretion of the bank, use one of the alternative methodologies specified below:

(a)	The basic indicator approach prescribed in subregulation (7);

(b)	Subject to the prior written approval of and such conditions as may be specified in writing by the Registrar, and the bank complying with the relevant minimum qualifying criteria specified in subregulation (8), the standardised or alternative standardised approach;

(c)	Subject to the prior written approval of and such conditions as may be specified in writing by the Registrar, and the bank complying with the minimum qualifying criteria specified in subregulation (9), the advanced measurement approach.

(4)	Subject to the provisions of subregulations (5) and (6) below, once a bank adopted one of the more sophisticated approaches for the measurement of the bank's exposure to operational risk, the bank shall not revert to a simpler approach without the prior written approval of the Registrar.

(5)

Subject to the prior written approval of and such conditions as may be specified in writing by the Registrar, a bank may use the advanced measurement approach for some parts of its operations and the basic indicator approach or standardised approach for the remainder of its operations, provided that—

(a)	the bank shall duly capture the operational risk of its global consolidated operations;

(b)

all the operations of the bank that are included in the advanced measurement approach shall adhere to the relevant qualifying criteria specified in subregulation (9), whilst the relevant parts of the bank's operations that are subject to one of the simpler approaches shall adhere to the qualifying criteria specified in respect of that relevant approach;

(c)	on the date of the implementation of the advanced measurement approach, a significant part of the bank's exposure to operational risk shall be subject to the advanced measurement approach;

(d)

the bank shall submit in writing to the Registrar a comprehensive plan that, amongst other things, shall specify the time period during which the bank intends to roll out the advanced measurement approach across all its operations provided that should the bank plan not to implement the advanced measurement approach across all its operations the bank shall specify and duly motivate in its plan to the Registrar any operation in respect of which the advanced measurement approach will not be implemented, which operation shall constitute an immaterial part of the bank's operations.

(6)

When a bank is unable, unwilling on unprepared to comply with the qualifying criteria specified for a particular approach in order to measure the bank's exposure to operational risk, the Registrar may in writing direct the bank to apply a different specified method for the measurement of the bank's exposure to operational risk, subject to such conditions as may be specified in writing by the Registrar.