Being in process of establishing an Operational Risk Management framework at a Bank that will span across all of its branches and subsidiaries. It is required to categorize and map our business lines data into Basel II prescribed business lines.
For such purpose the Banks organization’s income is divided into the following eight business lines:
1. Corporate finance;
2. Trading & sales;
3. Retail banking;
4. Commercial banking;
5. Payment & settlement;
6. Agency services;
7. Asset management; and
8. Retail brokerage.
Banks will have to assess the impact of the operational risk capital charge under the new Basel II guidelines for the Standardized Approach. For each business line, gross income is a broad indicator that serves as a proxy for the scale of business operations and thus the likely scale of operational risk exposure within each of the business lines.
Taking a typical example - We have detailed information relating to each of the eight business lines (please follow your Central Bank guide lines and Basel Accord) below. Please observe the definitions below as these do differ from Bank to Bank.
1. Corporate Finance
o Corporate Finance
o Municipal/Government Finance
o Merchant Banking
o Advisory Services
Mergers and acquisitions, underwriting, privatizations, securitization, research, debt government, high yield), equity, syndications, IPO, secondary private placements.
2. Trading & Sales
o Market Making
o Proprietary Positions
Fixed income, equity, foreign exchanges, commodities, credit, funding, own position securities, lending and repos, brokerage, debt, prime brokerage
3. Retail Banking
o Retail Banking
o Private Banking
o Card Services
Retail lending and deposits, banking services, trust and estates.
Private lending and deposits, banking services, trust and estates, investment advice.
Merchant/commercial/corporate cards, private labels and retail.
4. Commercial Banking
The activities are
Project finance, real estate, export finance, trade finance, factoring, leasing, lending, guarantees, bills of exchange.
5. Payment and Settlement
o External Clients
Payments and collections, funds transfer, clearing and & Settlement.
6. Agency Services
o Corporate Agency
o Corporate Trust
Escrow, depository receipts, securities lending (customers) corporate actions.
Issuer and paying agents.
7. Asset Management
o Discretionary Fund Management
o Non-Discretionary Fund Management
Pooled, segregated, retail, institutional, closed, open, private Equity.
Pooled, segregated, retail, institutional, closed, open.
8. Retail Brokerage
Execution and full service.