Article 4
Requirements for external sources for estimating losses given default
1. When using external sources for estimating losses given default in accordance with Article 325bp(6), point (d), of Regulation (EU) No 575/2013, institutions shall, in accordance with Articles 325bj(2) and 325bp(7) of that Regulation, validate the estimates of losses given default on a periodic basis for their use in the internal default risk model.
2. Institutions that use more than one external source shall establish a hierarchy of those external sources.