Op risk floor removed to give flexibility
BASEL, SWITZERLAND - Global banking regulators have removed the operational risk capital floor previously proposed under the Basel II capital accord to give banks flexibility in developing op risk management systems.
So said the Basel Committee on Banking Supervision, the architect of the accord, in its July 10 statement announcing agreement on many of the outstanding issues relating to Basel II, which it wants to bring into force for major banks in late 2006.
The decision to remove the op risk floor and instead create a single capital floor for credit risk and op risk for the first two years of the accord’s operation, was generally greeted favourably by bankers. Many had argued that the original op risk
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