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Specialised Lending - Basel II Accord Key Terms
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 A B C D E F G I K M O P R S T W 
Specialised Lending
  1. Loans that have been secured by an asset that must perform in order to pay the loan back. Example a commercial Real estate.
  2. The term specialised lending is associated with the financing of individual projects where the repayment is highly dependent on the performance of the underlying pool or collateral. For all but one of the specialised lending sub-categories, if banks can meet the minimum criteria for the estimation of the relevant data inputs, they can simply use the corporate IRB framework to calculate the risk weights for these exposures. However, in recognition that the hurdles for meeting these criteria for this set of exposures may be more difficult in practice, CP3 also includes an additional option that only requires that a bank be able to classify such exposures into five distinct quality grades. CP3 provides a specific risk weight for each of these grades. Example -‘high volatility commercial real estate’(HVCRE).

    See also: Capital Accord Overview Page 1
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© 2004 Larry Byrnes

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