Risk of default (PD)

• The service imports the PD value from credit information companies (UC, Bisnode etc)

• You can enter another value by clicking on the padlock and entering the information

Loss Given Default (LGD)

• Calculated automatically by the service.

  • Formula: Total limit minus Collateral value = Unsecured amount. Unsecured amount divided by Total limit gives LGD in percent

  • You can enter a new value for LGD by clicking on the padlock and entering a new value

  • The minimum value for LGD is set via "Settings" / Inställningar by an authorized person at the bank 

Expected Credit Loss (ECL)

• Formula: (Total limit * LGD) * PD = ECL

• Depending on the bank’s setup, the ECL handling can contain more settings than the simplified PD * LGD model shown above. The application also supports settings related to Expected Credit Loss and PD over longer time horizons.

  The values shown in the case should therefore always be interpreted together with the bank’s current ECL settings.

• Always automatically calculated based on PD and LGD in relation to total limit.