06/19/2024 – 10:26
The Central Bank made changes to the methodology that establishes procedures for calculating the capital requirement for operational risk (RWAOPAD), which increases the minimum resource requirement for banks by R$34 billion, which is equivalent to 2.6% of equity reference of the financial system.
BCB Resolution No. 356 will come into force from the first day of January 2025, and will be implemented gradually until 2028. The Central Bank considers external events, errors in internal processes, failures related to people or systems, as operational risk, in addition to of legal risks, such as those of a labor nature.
For customers, the new rules should bring greater financial security, reducing the chances of bank failures, for example. In addition to increasing investor confidence, the changes also potentially release more money into the country’s economy.
In contrast, there may be an increase in banks’ operating costs, which may end up being passed on to customers through higher fees, rates and interest.
Practical effects
According to Goldman Sachs estimates, the new rules will have a greater impact on institutions in the S3 segment (institutions with a size of less than 1%, and equal to or greater than 0.1% of GDP).
As a comparison, the estimate is that Nubank’s capital index, for example, would fall by 1.35%, while that of a financial institution in the S1 segment (banks that have a size equal to or greater than 10% of GDP, or that carry out activity relevant international market), such as Banco do Brasil, would have a smaller drop, of around 0.61%.
The difference occurs according to the participation of each agent in the sector’s operational risk, taking into account the old calculation methodology.
This new methodology replaces three calculation methodologies provided for in a previous rule, determined in 2013, but which presented a lot of volatility. In the new rule, the required capital may increase or decrease according to the relationship between operational losses and business volume offered by the institution.
How the new operational risk calculation will work
Eduardo Grell, risk and governance director at The Sharp Fintech, a company specializing in reducing risks and increasing efficiency for financial industries, explains how this new calculation will work:
“First, a new way of measuring a company’s activity was created, called BI (business indicator). BI is calculated by adding averages of three aspects: interest, services and finance, all considering a period of three years. These three pillars represent, in general, credit activities, collection of commissions and fees, and financial management. Each of these parts considers both income and expenses, unifying all previous methods into a single calculation.”
This new calculation rule is based on the implementation of Basel III standards in Brazil, a set of standards and recommendations for best practices and actions related to capital structuring for financial institutions.
According to the Central Bank, the capital requirement for operational risk purposes represents the second largest portion of capital required from the National Financial System (SFN). The idea with the adoption of the new rules is precisely to soften the impact of capital required by banks and financial institutions.
“The next step is to adjust these values to give more weight to the largest and most important institutions. This generates a new indicator called BIC (business weighted indicator). In short, the process involves creating an activity indicator, adjusting the values according to the importance of the institutions, and applying specific formulas to obtain the final value needed for the different categories of institutions.”, adds Grell.
The application of this new measure in theory strengthens the national financial system in the face of operational risks, in addition to promoting Brazil’s adherence to global risk management standards, an adjustment that has been made gradually in the country’s economy.
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