1.   When calculating their business indicator, institutions shall include items of acquired or merged entities or activities, based on historical audited financial statements. For acquisitions of activities for which dedicated financial statements were not historically established, institutions shall base the calculation on the historical financial information used for the final valuation of the activity acquired.

2.   Institutions that can prove that the historical audited financial statements or historical financial information related to the acquired or merged activity or entity are not available or accurate, shall include acquired or merged entities or activities in the calculation of their business indicator, using the institution’s business indicator multiplied by the M & A factor, which shall be calculated in line with the following formula and on the basis of the last financial information available and accurate in relation to that entity or activity, including the annualised ongoing financial exercise:

where Net Operating Income (NOI) is calculated as in Commission Implementing Regulation (EU) 2024/3117 (4) (FINREP F02.00_r355_c010).

3.   Where the M & A factor approach is not feasible due to a lack of data, institutions shall include acquired or merged entities or activities in the calculation of their business indicator using financial forecasts in relation to that entity or activity based on information used for the final valuation.

4.   Institutions shall use their audited financial statements for the calculation of the business indicator instead of the approach referred to in paragraph 2 as soon as the acquired or merged entity or activity is fully included in the institutions’ financial statements.

5.   Institutions shall also apply any business indicator adjustments in accordance with paragraphs 1 to 4 at the level of their parent undertaking where such parent undertaking is subject to Regulation (EU) No 575/2013 pursuant to Article 11 of that Regulation.

6.   Institutions shall notify their competent authority of their plan to include in the calculation of the business indicator entities or activities to be acquired or merged, in accordance with the methods referred to in paragraphs 1, 2 and 3. Institutions shall make that notification without delay and at the latest at the time of the inclusion, in accordance with Article 315(1) of Regulation (EU) No 575/2013, of the entities or activities to be acquired or to be merged and shall present the own funds requirements for operational risk as calculated in accordance with paragraphs 1, 2 and 3 of this Article.