Article 181 › 2

For retail exposures, institutions may do the following: (a) derive LGD estimates from realised losses and appropriate estimates of PDs; (b) reflect future drawings either in their conversion factors or in their LGD estimates; (c) For purchased retail receivables use external and internal reference data to estimate LGDs. For retail exposures, estimates of LGD shall be based on data over a minimum of five years. An institution needs not give equal importance to historic data if more recent data is a better predictor of loss rates. Subject to the permission of the competent authorities, institutions may use, when they implement the IRB Approach, relevant data covering a period of two years. The period to be covered shall increase by one year each year until relevant data cover a period of five years.

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Source: EUR-Lex CELLAR · retrieved 2026-09-04