Before a rating model is accepted for calculating regulatory capital it is subject to an on-site examination. That means, one examination at an applying bank will suffice only in the case of a smaller savings bank or credit co-operative, which use standard models developed by their associations.
In the case of our largest banks, a series of approval examinations will take place at every institution for evaluating the variety of rating models. Another issue with regard to Pillar 2 is the approval of advanced measurement approaches (AMA) for operational risk. Germany’s approach regarding the advanced approach for operational risk is similar to that for internal ratings approaches.