RESOLUTION OF BOARD OF THE NATIONAL BANK OF UKRAINE

of December 24, 2019 No. 156

About approval of the Regulations on procedure for determination by banks of Ukraine for the minimum extent of operational risk

According to Articles 7, of 15, 56 Laws of Ukraine "About the National Bank of Ukraine", to Articles 44, 66 Laws of Ukraine "About banks and banking activity", for the purpose of determination by banks of Ukraine of the minimum extent of operational risk the Board of the National Bank of Ukraine DECIDES:

1. Approve Regulations on procedure for determination by banks of Ukraine for the minimum extent of operational risk (further - the Provision) which are applied.

2. To banks of Ukraine:

1) to perfrom test calculation of the minimum extent of operational risk as of January 01, 2020 and till August 31, 2020 to give it to the National Bank of Ukraine in the form established by it;

2) since 2021 to perfrom calculation of the minimum extent of operational risk according to requirements of the Provision.

3. Banks of Ukraine during fulfillment of requirements of Item 11 of the Provision have the right to calculate financial component according to appendix to this resolution.

4. To department of methodology (Natalya Ivanenko) after official publication to inform banks information on adoption of this resolution.

5. To impose control over the implementation of this resolution on the First Deputy Chairman of the National Bank of Ukraine Ekaterina Rozhkova.

6. The resolution becomes effective from the date of, its official publication following behind day.

Appendix

to the Resolution of Board of the National Bank of Ukraine of December 24, 2019 No. 156

Calculation of financial component

Banks of Ukraine calculate financial component (further - FC) on formula:

1) as of January 1, 2020:  

2) as of January 1, 2021:  

3) as of January 1, 2022:

4) as of January 1, 2023 and further:

Approved by the Resolution of Board of the National Bank of Ukraine of December 24, 2019 No. 156

Regulations on procedure for determination by banks of Ukraine for the minimum extent of operational risk

1. This Provision is developed according to the Laws of Ukraine "Obank and banking activity", "About the National Bank of Ukraine".

The approaches determined by this Provision are based on the Basic principles of effective banking supervision of Basel Committee on Banking Supervision accepted by bank supervisory authorities at the 17th International conference of bank supervisory authorities (Core principles for effective banking supervision, on September 13-14, 2012), and recommendations "Basel III: Final coordination of reforms after crisis (Basel III: Finalising post-crisis reforms, on December 07, 2017)".

2. This Provision establishes procedure for determination by banks of Ukraine (further - bank) the minimum extent of operational risk for accounting when calculating capital adequacy ratios, according to requirements of the Instruction about procedure for regulation of activities of banks in Ukraine approved by the resolution of Board of the National Bank of Ukraine of August 28, 2001 No. 368, registered in the Ministry of Justice of Ukraine on September 26, 2001 for No. 841/6032 (with changes) (further - the Instruction No. 368).

3. In this Provision terms and reducings are used in such value:

1) the auditor - the term is used in the value determined in Regulations on the implementation of assessment of stability of banks and bank system of Ukraine approved by the resolution of Board of the National Bank of Ukraine of December 22, 2017 No. 141 (with changes);

2) the bank book - the term is used in the value determined in the Regulations on the organization of risk management system in banks of Ukraine and banking groups approved by the resolution of Board of the National Bank of Ukraine of June 11, 2018 No. 64 (with changes) (further - No. Provision 64);

3) accounting year - year for which data of the annual financial reporting are taken into consideration of the minimum extent of operational risk;

4) operational risk - the term is used in the value determined in the Provision No. 64 ;

5) the current year - year in which calculation of the minimum extent of operational risk is perfromed;

6) the trade book - the term is used in the value determined in the Provision No. 64 .

Other terms which are used in this Provision are used in the values determined by the laws of Ukraine and regulatory legal acts of the National Bank of Ukraine (further - National Bank).

4. The bank calculates the minimum extent of operational risk as of January first every year based on data of the annual financial reporting checked and confirmed with the auditor and additional data on formula:

SHOUTING = KB_ • VSW,

where OR - the extent of operational risk;

KBI - business indicator component;

VSW - the internal animator of damage (losses) from events of operational risk.

The bank applies value of VSW which is equal to 1 to calculation of the minimum extent of operational risk.

The National Bank reviews value of VSW taking into account results of banking supervision on check of completeness and quality of the statistical data which are saved up by banks about losses (losses) from events of operational risk according to requirements of the Provision No. 64 .

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