Op risk capital charge difficult to devise in imperfect Basel II, says US central banker

NEW YORK - The lack of an agreed methodology and credible loss data has made it extremely difficult to devise an operational capital risk charge under the terms of the Basel II bank capital accord, a senior US central banker acknowledged in mid-October.

It has resulted in banks being permitted to use their own internal measurement approaches to calculating an op risk capital charge, subject to quantitative and qualitative criteria and a minimum capital charge, Laurence Meyer, a board member of the US Federal Reserve System, said.

He was commenting on the slow progress and difficulties of bringing the complex Basel II accord, under which the op risk capital charge will be required of major banks, into effect.

He said one of the complexities of