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The default definition is a crucial concept with significant impacts on credit risk management. It affects how much capital banks must set aside for potential loan defaults. There are two primary approaches: STD and A-IRB.

STD Approach: It defines when a loan is in default and is used to categorize loans as "Exposures in default" according to regulations.

A-IRB Approach: This definition influences risk parameters, which, in turn, determine risk weights and expected loss calculations for both defaulted and non-defaulted loans. It's vital for calculating capital requirements and internal reporting.

The specific default definition adopted is as follows:

A loan is in default if it's overdue by more than 90 days and meets two conditions: a. The overdue amount is greater than EUR 100. b. The overdue amount is more than 1% of the total on-balance sheet exposure.

Alternatively, an account can be considered in default based on "Unlikeliness to Pay Indicators."

If a case doesn't meet the above criteria, it's not considered in default and is treated as non-defaulted.

The default definition is a crucial concept with significant impacts on credit risk management. It affects how much capital banks must set aside for potential loan defaults. There are two primary approaches: STD and A-IRB.

STD Approach: It defines when a loan is in default and is used to categorize loans as "Exposures in default" according to regulations.

A-IRB Approach: This definition influences risk parameters, which, in turn, determine risk weights and expected loss calculations for both defaulted and non-defaulted loans. It's vital for calculating capital requirements and internal reporting.

The specific default definition adopted is as follows:

A loan is in default if it's overdue by more than 90 days and meets two conditions: a. The overdue amount is greater than EUR 100. b. The overdue amount is more than 1% of the total on-balance sheet exposure.

Alternatively, an account can be considered in default based on "Unlikeliness to Pay Indicators."

If a case doesn't meet the above criteria, it's not considered in default and is treated as non-defaulted.