(ii)

if PD = 1, i.e., for defaulted exposures: where institutions apply the LGD values set out in Article 161(1), RW shall be 0; where institutions use own estimates of LGDs, RW shall be RW = max 0,12.5 · (LGD – EL_(BE)); where the expected loss best estimate (hereinafter referred to as 'EL_(BE)') shall be the institution's best estimate of expected loss for the defaulted exposure in accordance with Article 181(1)(h);

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Source: EUR-Lex (Cellar) · retrieved 2026-09-25 · Text as adopted (Official Journal); later amendments are not incorporated in this text.