The rule in plain words
This represents the BIC for Bucket 2 when the BI range is between £0.88bn and £26bn, using a 15% marginal coefficient
In Operational risk: part 3 - business indicator component (OPR) (OF16.00.01.03): if "Business Indicator (BI)" in column "Component value" (row 0010, column 0050) in Operational risk: part 4 - business indicator and subcomponents (OPR) (OF16.00.01.04) is more than 880 multiplied by 1000 multiplied by 1000 and "Business Indicator (BI)" in column "Component value" (row 0010, column 0050) in Operational risk: part 4 - business indicator and subcomponents (OPR) (OF16.00.01.04) is not more than 26000 multiplied by 1000 multiplied by 1000, "Bucket Amount" in column "Bucket 2 - 15%" (row 0020, column 0030) must equal "Business Indicator (BI)" in column "Component value" (row 0010, column 0050) in Operational risk: part 4 - business indicator and subcomponents (OPR) (OF16.00.01.04) minus 880 multiplied by 1000 multiplied by 1000 multiplied by 0.15; otherwise if "Business Indicator (BI)" in column "Component value" (row 0010, column 0050) in Operational risk: part 4 - business indicator and subcomponents (OPR) (OF16.00.01.04) is more than 26000 multiplied by 1000 multiplied by 1000, "Bucket Amount" in column "Bucket 2 - 15%" (row 0020, column 0030) must equal 26000 multiplied by 1000 multiplied by 1000 minus 880 multiplied by 1000 multiplied by 1000 multiplied by 0.15; otherwise "Bucket Amount" in column "Bucket 2 - 15%" (row 0020, column 0030) must equal 0.
What to do if your return fails it
- 01Open the tables below and find the cells the rule reads.
- 02The check applies only when its first part holds in your return. When it does, the second part must hold too: fix the second part, or correct the first.
- 03The Bank of England allows a small rounding difference, worked out from the decimals each value is reported with.
- 04It runs only when your filing indicators mark OF16.00.01.03 and OF16.00.01.04 as reported.
- 05This is a warning. It does not stop the return on its own, but your supervisor may ask you to explain it.
The cells it reads
Operational risk: part 3 - business indicator component (OPR) (OF16.00.01.03)
Row
- R0020Bucket Amount
Columns
- C0010Amount
- C0030Bucket 2 - 15%
Operational risk: part 3 - business indicator component (OPR) (SC16.00.01.03)
Row
- R0020Bucket Amount
Columns
- C0010Amount
- C0030Bucket 2 - 15%
Which returns it applies to
Line4 Check runs it on the own funds (PRA001) and own funds for SDDTs (PRA116) returns on Bank of England banking taxonomy 4.1.1. The Bank of England applies it to own funds for SDDTs (PRA116) and own funds (PRA001) returns, as a warning.
The Bank’s own words and formula
The first paragraph of the plain words above is the Bank of England’s own, word for word, from its list of validations. The second spells out its formula, with each cell named from its templates.
Show the formulaShowHide
The Bank of England's formula. Cells are written as {t: table, r: row, c: column}.
if ({t: OF16.00.01.04, r: 0010, c: 0050} > 880 * 1000 * 1000 and {t: OF16.00.01.04, r: 0010, c: 0050} <= 26000 * 1000 * 1000) then {t: OF16.00.01.03, r: 0020, c: 0030} = ({t: OF16.00.01.04, r: 0010, c: 0050} - 880 * 1000 * 1000) * 0.15 else if {t: OF16.00.01.04, r: 0010, c: 0050} > (26000 * 1000 * 1000) then {t: OF16.00.01.03, r: 0020, c: 0030} = (26000 * 1000 * 1000 - 880 * 1000 * 1000) * 0.15 else {t: OF16.00.01.03, r: 0020, c: 0030} = 0Other rules on Operational risk: part 3 - business indicator component (OPR) (OF16.00.01.03)
- To calculate the BIC for Bucket 1 when the BI amount is less than or equal to £0.88bn, the BI is multiplied by 12% (boe_b0909)
- Operational risk: part 3 - business indicator component (OPR): bucket 3 BIC represents 18% of the BI amount greater than £26bn (boe_b0911)
- Operational risk: part 3 - business indicator component (OPR): business Indicator Bucket 1 is mandatory and must not be empty (boe_b0913)Blocking
- A positive amount has been reported in Bucket 3 of the BI component, therefore, Bucket 2 cannot be blank (boe_b0914)
- Operational risk: part 3 - business indicator component (OPR): a conditional check (boe_b0600)Not run
- Operational risk: part 3 - business indicator component (OPR): a conditional check (boe_b0599)Not run
- The Business Indicator Component (BIC) is equal to the sum of the amounts in Bucket 1, Bucket 2, Bucket 3 (boe_b0456)Blocking
Every PRA banking rule on OF16.00.01.03
Checks like this one, run at the point of submission, are the first step to real-time supervision. Line4 builds SupTech software for financial regulators that runs checks like these as each return arrives.