Article 5
Definitions specific to capital requirements for credit risk
For the purposes of Part Three, Title II, the following definitions shall apply:
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(1) |
‧exposure‧ means an asset or off-balance sheet item; |
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(2) |
‧loss‧ means economic loss, including material discount effects, and material direct and indirect costs associated with collecting on the instrument; |
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(3) |
‧expected loss‧ or ‧EL‧ means the ratio of the amount expected to be lost on an exposure from a potential default of a counterparty or dilution over a one year period to the amount outstanding at default. |