EBA Pushback on Commission Operational Risk RTS: What It Means for CRR3 Reporting

ByOfficer

Last updated: April 2026

Your team has spent months mapping P&L line items to the new Business Indicator sub-components under CRR3. The templates are live from June 2026. And now the European Commission and the EBA are publicly disagreeing about how two of the underlying technical standards should work. If you are filing COREP operational risk returns, this is not academic. It could change how you calculate the financial component of the Business Indicator, and whether you need to notify your competent authority when you adjust your approach.

On 23 April 2026, the EBA published an Opinion objecting to two specific amendments the European Commission proposed to the EBA’s own final draft Regulatory Technical Standards on operational risk under the CRR. The Commission had informed the EBA on 2 March 2026 that it intended to endorse the RTS, submitted in June and August 2025, but with changes. The EBA accepted most of those changes. It rejected two.

This article breaks down what the Commission changed, why the EBA pushed back, what remains unresolved, and what reporting teams should do while the dust settles.

Related reading: CRR3 Operational Risk Reporting: What Changes From June 2026 for Luxembourg Banks

The Two RTS at the Centre of the Dispute

The EBA submitted two sets of final draft RTS to the Commission during 2025. Both sit under the rewritten Part Three, Title III of the CRR (Articles 311a to 323 of Regulation (EU) No 575/2013 as amended by CRR3).

The first set, submitted in June 2025, specifies the components of the Business Indicator under Article 314(9) of the CRR and the adjustments to the Business Indicator for mergers, acquisitions, and disposals under Article 315(3). The second set, submitted in August 2025, establishes a harmonised risk taxonomy for operational risk losses under Article 317(9) of the CRR, along with provisions under Articles 316(3) and 321(2) on the calculation of annual operational risk losses and adjustments to loss data sets following mergers or acquisitions.

These are not reporting templates. They are the calculation rules that feed into the templates. If the RTS change, the numbers in your COREP OR submissions change too. That is why this matters for anyone working on the reporting side, not just the risk methodology team.

The Commission accepted the bulk of both standards. Its proposed amendments were limited and largely focused on readability and legal precision. The EBA confirmed it supports those changes. The disagreement sits on two specific points, and both relate to how institutions use the Prudential Boundary Approach alongside the Accounting Approach for the financial component.

Amendment One: Combining the Accounting Approach and Prudential Boundary Approach

Under the EBA’s original draft, institutions had to choose one method for calculating the financial component of the Business Indicator (BI) and apply it across the full balance sheet. You either use the Accounting Approach (AA), which draws directly from IFRS or national GAAP P&L data, or the Prudential Boundary Approach (PBA), which uses a defined set of items from the prudential scope. You do not mix them.

The Commission’s amendment would allow institutions to use both approaches simultaneously. An institution could apply the AA to part of its balance sheet and the PBA to another part. On paper, this looks like flexibility. In practice, the EBA argues it creates real problems.

The EBA’s objection rests on multiple grounds. First, the combined approach is not envisaged in the Basel standard (BCBS d424), which designed the Standardised Measurement Approach around a single, institution-wide calculation method. Second, mixing AA and PBA within a single institution increases complexity and creates inconsistencies across risk frameworks. Third, the EBA explicitly flags the risk of regulatory arbitrage: institutions could carve up their balance sheet to minimise the financial component of the BI, with no genuine business rationale for the choice. A supervisor looking at two institutions of similar size might see different financial component values driven not by genuine business differences but by how each carved up its balance sheet between AA and PBA. Fourth, the EBA notes that the change would benefit only a limited number of institutions.

What Teams Commonly Get Wrong Here

I have seen reporting teams assume the financial component is the least sensitive part of the BI because it is often the smallest sub-component for non-trading-heavy banks. That is a mistake. For institutions with material banking book positions or trading activity, the financial component can swing the BI meaningfully. The choice between AA and PBA is not a formality. It determines which P&L items enter the calculation and how unrealised gains and losses are treated.

If the Commission’s amendment stands, teams will need to document and justify which portions of the balance sheet use which approach. That is a governance burden most mid-size banks have not planned for.

Amendment Two: Notification Obligations for Scope Changes

The EBA’s original RTS required institutions using the PBA to notify their competent authority whenever they changed the scope of items included under the approach. The Commission’s amendment narrows this: notification would only be required for “material” changes when the PBA is used in combination with the AA.

The EBA considers this a weakening of supervisory oversight. The problem is the word “material.” Introducing a materiality threshold for notification means each institution decides what counts as material. That makes supervisory review harder, not easier. Instead of receiving a clear notification whenever the PBA scope shifts, the competent authority relies on each institution’s own assessment of whether the shift was big enough to report.

What Teams Commonly Get Wrong Here

Some teams treat notification obligations as administrative checkboxes. They are not. In the context of CRR3 operational risk, a change in PBA scope directly changes the inputs to the BI, which directly changes the own funds requirement. A scope change that is not notified is, in effect, a change to your capital requirement that your supervisor does not know about until the next SREP review or on-site inspection.

If you are in Luxembourg, the CSSF is your direct competent authority (or the ECB for significant institutions under the SSM). Either way, the expectation is that you proactively inform the supervisor of methodology changes. Waiting to see if they notice is not a strategy.

What the EBA Accepted

The Opinion is not a blanket rejection. The EBA explicitly supports the Commission’s other amendments, which it describes as improvements to readability and legal certainty. These include clarifications to definitions, alignment of terminology across the two RTS, and minor drafting corrections that do not change the substance of the requirements.

For reporting teams, this means the core architecture of the RTS is stable. The BI sub-component definitions, the three-year averaging methodology, the marginal coefficient buckets (12%, 15%, 18%), the loss data requirements for the harmonised risk taxonomy under Article 317(9): all of these remain as the EBA originally drafted them.

Where This Sits in the Regulatory Process

This is an EBA Opinion issued under Article 10(1) of Regulation (EU) No 1093/2010. That provision requires the Commission to consult the EBA when it intends to endorse draft RTS with amendments. The EBA must then issue an opinion within six weeks.

The Opinion is not binding. The Commission can proceed with its amendments despite the EBA’s objections. It can also revise its position. The standard process from here is that the Commission either accepts the EBA’s position and drops the amendments, maintains its amendments and adopts the RTS as modified, or enters a negotiation that lands somewhere in between. There is no fixed timeline for resolution.

What Teams Commonly Get Wrong Here

The biggest error I see is treating an open dispute between the Commission and the EBA as a reason to pause implementation work. It is not. The RTS, in whatever final form they take, will apply. The COREP reporting templates with reference date 30 June 2026 are confirmed. The Business Indicator Component calculation is law under Article 312 of the CRR. The dispute is about how one specific component within the BI is calculated, not whether the entire framework changes.

If you stop working because the AA/PBA question is unresolved, you will be scrambling when the final text drops. Build your process for one approach (whichever your institution has already chosen), and plan a fallback in case the combined-use option survives.

Practical Impact for Luxembourg Reporting Teams

Luxembourg sits in a specific position here. Most CSSF-supervised credit institutions are not trading-heavy, which means the financial component of the BI is often modest relative to the Interest, Leases and Dividend Component (ILDC) and Services Component. For these institutions, the AA/PBA dispute may not move the needle on capital requirements in a material way.

But that is not universally true. Luxembourg hosts custodian banks, private banks with material securities portfolios, and branches of larger groups where the financial component can be significant. For these entities, the ability (or inability) to combine AA and PBA on the same balance sheet is a real calculation question.

From a process standpoint, every institution should be doing three things right now.

First, confirm which approach (AA or PBA) your institution is using and ensure the mapping is complete. If you are currently planning to use a combined approach because someone on the risk team read an early Commission draft, flag that immediately. The combined approach is contested and may not survive.

Second, review your notification procedures. Regardless of whether the materiality threshold survives, you should have a documented process for flagging PBA scope changes to the CSSF or ECB. If you do not, build one.

Third, check your COREP reporting workflows for the new operational risk templates against the BI sub-component definitions in the RTS. The templates reference the RTS definitions directly. If the RTS text shifts, your validation rules may also shift. Stay close to the EBA’s DPM and taxonomy releases for updates.

Distinguishing Enacted Law From Open Questions

There is a real risk of conflating what is settled with what is still moving. Here is the breakdown.

Settled and Enacted

CRR3 (Regulation (EU) 2024/1623) is in force. The Business Indicator Component replaces all legacy approaches. Articles 311a to 323 of the CRR define the framework. The marginal coefficient structure (12/15/18%) is law. The EU has not activated the Internal Loss Multiplier. First mandatory COREP reference date for the new operational risk templates is 30 June 2026, following the one-quarter deferral under Regulation (EU) 2025/2475.

Still in Dispute

Whether institutions can combine AA and PBA within a single balance sheet for the financial component calculation. Whether notification obligations for PBA scope changes apply to all changes or only “material” changes.

Stable but Not Yet in the Official Journal

The two RTS themselves. They have been submitted, the Commission has proposed amendments, the EBA has responded. The final adopted versions have not yet been published. Until they appear in the Official Journal, the precise regulatory text is not locked.

Frequently Asked Questions

Does this EBA Opinion change the June 2026 COREP deadline?

No. The reporting reference date of 30 June 2026 is set by the ITS on supervisory reporting, not by the RTS under dispute. The templates are confirmed. Even if the RTS text is still being finalised, the COREP submission date does not move.

Can my institution use the combined AA/PBA approach right now?

Not yet. The RTS have not been adopted in their final form. Until the final text is published in the Official Journal, the combined approach is not authorised. Plan your calculation based on a single approach.

What happens if the Commission overrides the EBA’s objection?

The Commission has the legal authority to adopt the RTS with its amendments intact, despite the EBA Opinion. The European Parliament and Council then have a scrutiny period. If neither objects, the RTS enter into force as adopted by the Commission.

Does this affect the Internal Loss Multiplier?

No. The ILM is a separate question. The EU chose not to activate the ILM under CRR3 (Article 312(1) sets OFR = BIC). The current dispute is about how the financial component of the BI is calculated, not about loss-based adjustments.

Should we notify the CSSF about our chosen approach now?

If you are using the PBA, you should already have a process for notifying the CSSF (or the ECB for significant institutions). The question is whether future scope changes require notification. Best practice: notify proactively regardless of where the materiality threshold lands.

How does this affect Pillar 3 disclosures?

Pillar 3 operational risk disclosures under CRR3 reference the same BI calculation. If the method for computing the financial component changes, the disclosed figures change with it. Teams handling Pillar 3 disclosures should coordinate with the COREP reporting team to ensure consistency.

Is there a risk the entire RTS gets delayed?

Possible but unlikely. The EBA accepted most of the Commission’s amendments. The dispute covers two specific points. The standard outcome is a resolution on those points, not a restart of the entire process.

Related Articles

Key Takeaways

  • The EBA objects to two Commission amendments to the operational risk RTS under CRR3: allowing combined AA/PBA use and weakening notification obligations for scope changes.
  • The RTS are empowered by Article 314(9) (BI components), Article 315(3) (adjustments for mergers, acquisitions, and disposals), and Article 317(9) (harmonised risk taxonomy), among other CRR provisions.
  • The June 2026 COREP reporting deadline is unaffected by this dispute. Templates are confirmed.
  • The core BIC calculation framework (sub-components, marginal coefficients, three-year averaging) is settled law under CRR3.
  • Do not pause implementation. Build your process for a single approach (AA or PBA) and plan a contingency if combined use is eventually permitted.
  • Luxembourg institutions should review PBA notification procedures with the CSSF or ECB now, not after the final text drops.
  • The EBA Opinion is not binding. The Commission can proceed with its amendments, but the EBA’s objections carry significant weight in the legislative process.
  • Coordinate between COREP reporting and Pillar 3 disclosure teams. The same BI calculation underpins both.

Sources and References

Disclaimer: The information on RegReportingDesk.com is for educational and informational purposes only. It does not constitute legal, regulatory, tax, or compliance advice. Always consult your compliance officer, legal counsel, or the relevant supervisory authority for guidance specific to your institution.

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