INTM267744 - Foreign banks trading in the UK through permanent establishments: »Ê¹ÚÌåÓýapp approach in determining an adjustment to funding costs - STEP 2: Risk weighting the assets - the Basel II regulatory regime: Pillar 1 - the alternative standardised approach to

If it meets certain criteria a bank which derives 90% or more of its income from retail and/or commercial banking may receive Prudential Regulation Authority (PRA) authorisation to use the Alternative Standardised Approach to operational risk.

»Ê¹ÚÌåÓýapp relevant indictors under this approach are the same as for »Ê¹ÚÌåÓýapp Standardised Approach (TSA) except for two business lines: retail banking and commercial banking. For these lines the operational risk capital requirement is calculated as a normalised income indicator equal to the three year average of the total nominal amount of loans and advances multiplied by:

  1. 0.035, and then
  2. the appropriate business line percentage shown above.