Section 275 of the Solvency Ordinance (as of 01.01.2007)
Business line mapping
1An institution using the Standardised Approach shall develop specific policies and criteria for mapping its business activities and the relevant indicator to the regulatory business lines specified in section 273 (4) and listed in Table 29 of Annex 1. 2These policies and criteria shall be documented, regularly reviewed and adjusted as appropriate for new or changing business activities. 3The policies and criteria shall meet the following requirements:

1. 1.each business activity shall be clearly mapped to one regulatory business line,

2. ancillary activities which cannot be readily mapped to a regulatory business line shall be allocated to the regulatory business line they support. 2If an ancillary activity supports several business activities which are mapped to different regulatory business lines, an objective criterion shall be used for mapping this activity,

3. business activities, including ancillary activities that support them, which cannot be mapped to a particular regulatory business line shall be mapped in full to a regulatory business line yielding the highest beta factor pursuant to section 273 (4),

4. institutions may use internal methods for allocating the relevant indicator when mapping it to the regulatory business lines if those methods can be objectively substantiated, and costs generated in one business line which are imputable to a different business line may be reallocated to that business line,

5. the criteria for mapping business activities to the regulatory business lines shall be consistent with the criteria used for credit and market risks,

6. notwithstanding the overall responsibility of the management board, senior management, especially that which signs off on the institution's internal business lines, shall be responsible for the mapping policy for the business activities and the relevant indicator, and

7. the mapping process is subject to review by internal or external auditors.

Explanatory comments
Section 275 of the Solvency Regulation contains the requirements for the institution-specific policies and criteria for the mapping of business activities and the relevant indicator to the regulatory business lines mentioned in section 273 (4).

The regulatory business lines are defined in detail in the Table below, which is consistent with Table 2 of Part 2 of Annex X of the CRD. The business line definitions of the Basel Capital Accord (Annex 6) may be referred to for additional information, insofar as they do not conflict with the Table below. The list of activities in the Table is not exhaustive. The beta factors are to be found in the Solvency Regulation only in section 273 (4).

Annex 1, Table 29 of the Solvency Ordinance
(Re section. 275 (1))
Regulatory business lines

Business line - percentage	List of activities
Corporate Finance Beta factor 18%	Underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis; Services related to underwriting; Investment advice; Advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to mergers and the purchase of undertakings; Investment research and financial analysis and other forms of general recommendation relating to transactions in financial instruments.
Trading and Sales Beta factor 18%	Dealing on own account; Money broking; Reception and transmission of orders in relation to financial instruments; Execution of orders; Placing of financial instruments without a firm commitment basis; Operation of Multilateral Trading Facilities. (Equivalent activities with retail clients are to be mapped to the Retail Brokerage business line)
Retail Brokerage Beta factor 12% Activities with retail clients, including activities with natural persons or with small and medium-sized enterprises, which in analogous application of the criteria of section 25 (10) are to be classified as retail business.	Investment advice; Reception and transmission of orders in relation to financial instruments; Execution of orders; Placing of financial instruments without a firm commitment basis.
Commercial Banking Beta factor 15%	Acceptance of deposits and other repayable funds; Lending; Financial leasing; Guarantees and commitments. (Equivalent activities with retail clients are to be mapped to the Retail Banking business line.)
Retail Banking Beta factor 12% Activities with retail clients, including activities with natural persons or with small and medium-sized enterprises, which in analogous application of the criteria of section 25 (10) are to be classified as retail business.	Acceptance of deposits and other repayable funds; Lending; Financial leasing; Guarantees and commitments.
Payment and Settlement Beta factor 18%	Money transmission services; Issuing and administering means of payment.
Agency Services Beta factor 15%	Safekeeping and administration of financial instruments for the account of clients; Custodianship and related services (e.g. cash/collateral management)
Asset Management Beta factor 12%	Portfolio management; Managing of UCITS*; and Other forms of asset management.

Notes on the mapping of activities and the relevant indicator for the purpose of determining the capital requirement for operational risk in the Standardised Approach:

Re section 275 sentence 2
The documentation within the meaning of section 275 sentence 2 of the mapping criteria must include, in particular, a description of the apportionment key and a plausible statement of reasons for this apportionment.

Re section 275 sentence 3 no. 1
Block mapping
As a matter of general principle, the relevant indicator should be assigned to the business line from which it results. The basis for this is the mapping of activities to regulatory business lines. The mapping of an institution's activities into business lines need not, however, be done at the level of each individual activity. Accordingly, the relevant indicator need not be determined on the basis of individual book entries, products or individual activities and mapped to the regulatory business lines. As a matter of general principle, block mapping of the relevant indicator to the regulatory business lines on the basis of internal accounting system aggregate data is also permissible instead.

As a rule the relevant indicator is not available at the level of the individual client. For that reason mapping will generally be done from the internal business area accounting to the regulatory business lines taking into account e.g. activities/products/client groups.

An objectively plausible mapping of the relevant indicator to business lines on the basis of internal organisational units and appropriate percentage keys is sufficient, provided there is no regulatory arbitrage. Information on deriving distribution keys and notes on distinguishing between commercial and retail banking business may be found under the explanatory comments on section 275 sentence 3 no. 5.

Structural changes over time
An institution's business and legal structures may change rapidly; this is also true for the demarcation of business lines. No retrospective changes shall be made to the apportionment of the relevant indicator to the business lines that has been applied in previous years or to the amount thereof, save for the setting of special ratios pursuant to section 10 (1b) indents (a) and (b) of the German Banking Act (KWG).

Re section 275 sentence 3 no. 2
Demarcation of ancillary from directly mappable activities
Part of the retail and commercial banking business lines is the "traditional" banking business, such as deposit-taking, lending and account management. Credit card business may also be mapped to retail banking, irrespective of the type of client.

If, in addition to other activities, retail brokerage business is carried on for retail clients in an ancillary capacity and there is no separate organisational unit for this, income and expenditure from this may be assigned to the retail banking business line.

Income from the provision of investment advice for retail clients may also be mapped to the retail banking business line if this advice cannot be regarded solely as investment advice in connection with securities transactions.

Payment and settlement activities and agency services should be mapped to the corresponding regulatory business lines if these services represent primary activities of the institution. For example, the execution of payment orders for other institutions as a specific business is mapped to the payment and settlement business line, while the provision of such services for retail clients as an ancillary activity may be allocated to retail banking. The relevant indicator may also be mapped to the regulatory business lines via plausible distribution keys in such cases.

Factoring business may be mapped in full to the commercial banking business line; apportionment to retail and commercial banking is permissible. This also includes income from the collection of accounts receivable that have not (yet) been purchased only because the limits granted have been utilised.

Regular income from securities and investment funds held in the banking book and income from deposits with credit institutions and central banks not arising in the course of money market trading is to be allocated to commercial banking. Realised profits and losses from the sale of banking book positions are by definition not a component of the relevant indicator and thus not affected by mapping.

Regular income and losses from securities and investment funds held in the trading book are to be mapped to the trading and sales business line.

Profits and losses on the sale of trading book swaps and other derivatives and on maturing trading and banking book swaps and other derivatives that have in each case been employed to hedge retail or commercial banking risks may, when being included in the relevant indicator, be mapped to these regulatory business lines since such transactions may be regarded as ancillary activities.

Re section 275 sentence 3 no. 3
In the case referred to in section 275 sentence 3 no. 3, the value of the relevant indicator is to be mapped to one of the regulatory business lines with the highest beta factor (18 percent). This must be documented.

Re section 275 sentence 3 no. 5
Client group demarcation
The activities with clients that constitute retail business ("retail clients") are to be mapped to the retail banking and retail brokerage business lines, to distinguish them from the commercial banking and trading and sales business lines.

The option to assign the relevant indicator to the regulatory business lines on the basis of internal accounting system aggregate data and percentage keys remains unaffected by this.

For the purpose of client group demarcation, the concept of retail business as defined by section 25 the Solvency Ordinance should as a matter of general principle be applied. When defining retail business, institutions may also take account of the IRBA "retail" asset class (section 76 of the Solvency Ordinance). The criteria used must be consistent with the criteria used for determining the capital charge for credit risk and market risk. It should, however, be noted that the capital charge for market risk in the Standardised Approach is determined via risk types, for credit risks via exposure classes and for operational risk (in the STA) via business lines. Per se, risk types, exposure classes and business lines do not bridge into each other. In addition, the relevant indicator does not generally exist for exposure classes, since under the system they are used only for determining the capital charge for the lending business.

Internal business areas form the basis for consistent processes for dealing with activities/products/client groups and the associated risks. Consequently, internal business areas have different risk profiles. Mapping activities and thus the relevant indicator to the regulatory business lines can therefore also be derived from the allocation to internal business areas.

Steps should, however, be taken here to ensure that the relevant indicator is allocated between the retail and commercial banking business lines and the retail brokerage and trading and sales business lines on the basis of criteria that are not inconsistent with the criteria used for credit risk and market risk.

The criteria for determining the retail asset class should be applied as follows:

1. the client relationship must be with a natural person or a small and medium-sized enterprise;

2. in the latter case, the individual client relationship is like a large number of other client relationships in terms of operational risks, so that these risks are significantly reduced and the volume of orders or scale of business in a client relationship generally falls within a commensurate band. These amounts should be lower than corresponding amounts in commercial banking and trading and sales.

*Undertakings for Collective Investment in Transferable Securities

Notes on the derivation of distribution keys for the apportionment of the relevant indicator to regulatory business lines
For the purpose of deriving distributions keys, in order to simplify the procedure, it is possible to take only the income components of the relevant indicator into account.

It should, however, be borne in mind that the sum of the relevant indicator of the individual regulatory business lines must, overall, always equal the sum of the relevant indicator derived from the profit and loss statement.

If in one internal business area the income has to be mapped very largely to one regulatory business line, the internal business area's relevant indicator may be mapped in full to the regulatory business line.

If within one internal business area income is earned to a considerable extent in a number of regulatory business lines, the relevant indicator should be mapped to those regulatory business lines, if necessary via distribution keys.

If income is mapped via distribution keys, these may be derived from e.g. random samples of the scale of the business carried out or income earned or on the basis of the volume of the corresponding loan portfolios.

Alternatively, the internal allocation of business by client groups may also be used when determining the distribution keys if the creation of client groups on the whole gives ground for expecting that this will lead to a proper apportionment of the relevant indicator and that the creation of client groups will bear a relationship to the expected level of business.