UK accepts large banks could use basic op risk approach

LONDON - The UK’s chief financial market watchdog said in July it accepted that a large international bank could use the basic indicator approach, the simplest of the three approaches to calculating operational risk capital charges proposed under the Basel II bank accord.

"Equally, we see no reason why a smaller firm with sophisticated risk management systems should not use an advanced measurement approach, although in practice there may be cost-benefit limits here for smaller firms," the UK Financial Services Authority (FSA) said.

And banks using, say, an advanced approach to credit risk may use a non-advanced approach to op risk.

But over time the agency expects the number of UK banks and investment firms using advanced approaches to increase.

The FSA made the