The European Banking Authority (EBA) today published an Opinion opposing two amendments proposed by the European Commission to the draft Regulatory Technical Standards (RTS) on operational risk capital requirements, warning that the changes could undermine consistency, transparency, and supervisory effectiveness. The EBA argues that allowing institutions to combine the accounting approach (AA) and the prudential boundary approach (PBA) for calculating the financial component of the business indicator would increase complexity, create inconsistencies across risk frameworks, and facilitate regulatory arbitrage, benefiting only a limited number of institutions. It also objects to limiting notification obligations to material changes in the scope of the PBA when used with the AA, which it says could weaken supervisory oversight by introducing institution-specific materiality judgments.
Document details and nature
The Opinion, issued on April 23, 2026, under Article 10(1) of the EBA's founding regulation, responds to the Commission's March 2, 2026 notification of its intention to endorse the draft RTS with amendments. The EBA had submitted the draft RTS in June and August 2025. The document is a formal opinion—non-binding but carrying significant weight in the EU legislative process. The RTS specify components of the business indicator, adjustments to profit and loss data, and a harmonised risk taxonomy for operational risk under the Capital Requirements Regulation (CRR).
Policy orientations and trade-offs
The core cleavage is between regulatory consistency and flexibility for institutions. The EBA prioritises a uniform, prudent framework aligned with Basel standards, while the Commission seeks to offer banks more options to reduce compliance burden. The EBA's stance favours transparency and supervisory effectiveness over operational flexibility, arguing that the proposed flexibility could enable regulatory arbitrage and complicate cross-institutional comparisons. The Commission's amendments aim to improve readability and legal certainty, which the EBA supports for other changes, but the two contested amendments introduce a trade-off between simplicity for a few institutions and systemic coherence.
Impact on stakeholders
- EU banks: A minority of institutions that could benefit from combined AA/PBA use would face higher compliance costs if the EBA's position prevails, as they would have to apply a single approach. Conversely, if the Commission's amendments stand, those banks could reduce capital charges through more favourable calculations, potentially increasing systemic risk.
- National competent authorities: Supervisors would face greater complexity in reviewing institution-specific materiality judgments under the Commission's proposal, increasing supervisory burden. The EBA's preferred approach maintains clearer, more standardised oversight.
- EU taxpayers and financial stability: The EBA's insistence on a single approach reduces the risk of capital understatement, protecting the deposit guarantee schemes and taxpayers from potential bank failures. The Commission's flexibility could lower capital buffers for some banks, marginally increasing systemic vulnerability.
- European Commission: The Opinion challenges the Commission's regulatory discretion, potentially delaying finalisation of the RTS and creating institutional friction. The Commission must decide whether to accept the EBA's objections or proceed with amendments, risking legal challenge or political pushback.
Expected institutional follow-up
The EBA invites the Commission to reconsider the two contested amendments. The Commission is not obliged to follow the Opinion but must respond formally. If the Commission insists on its amendments, the EBA could escalate the matter to the European Parliament and Council, which have scrutiny rights over RTS. The final RTS are expected to be adopted later in 2026, with implementation deadlines for banks to follow.