Question 1: If a bank incurs a negative gross income in any of the previous three years, will it be taken into account under the Basic Indicator Approach (BIA)?
The basis for working out the capital charge for operational risk under the BIA is three-year average of positive gross income. If the gross income for any of the previous three years is negative or zero, the figures for that year will be excluded from both the numerator and the denominator when calculating the capital charge. The negative gross income will not be added to the numerator and the denominator will exclude the year in which the income is negative.
As mentioned under the Basic Indicator Approach, if negative gross income distorts a bank’s Pillar 1 capital charge under the Standardised Approach, supervisors will consider appropriate supervisory action under Pillar 2.

Question 2: Can the Central Bank detail or provide examples of the extraordinary or irregular items under the definition of Gross income. Does this cover the bank selling off certain part of its business?
An extraordinary or irregular item consists of gains or losses included on a bank's P&L statement (usually reported separately as these items are not predictors of future performance) from events that are unusual and infrequent in nature. Such items are the result of unforeseen and atypical events that are outside the normal course of the core banking business (i.e. outside the types of income described in paragraph 13 of the Operational Risk section of Standards re Capital Adequacy in the UAE). For example, income derived from non-core banking business; income from discontinued operations; extraordinary income (e.g. from the sale of certain part a banking business).