Risk parameter estimates for purchased corporate receivables
Article 58
Open ↗1. When assessing the adequacy of PD and LGD estimates for purchased corporate receivables, where the institution derives PD or LGD for purchased corporate receivables from an estimate of EL in accordance with Article 160(2) and point (e) and (f) of Article 161(1) and an appropriate estimate of PD or LGD, competent authorities shall verify that: (a) EL is estimated from the long-run average of one-year total loss rates or by another appropriate approach; (b) the process for estimating the total loss is consistent with the concept of LGD as set out in Article 181(1)(a) of Regulation (EU) No 575/2013; (c) that the institution is able to decompose its EL estimates into PDs and LGDs in a reliable way; (d) in the case of purchased corporate receivables where Article 153(6) of Regulation (EU) No 575/2013 is applied, sufficient external and internal data are used. 2. When assessing the adequacy of PD and LGD estimates for purchased corporate receivables in cases other than those referred to in paragraph 1, competent authorities shall: (a) assess those estimates in accordance with Articles 42 to 52; (b) verify that the requirements of Article 184 of Regulation (EU) No 575/2013 are met.