Regulatory Alerts2022-03-28 | CBE3.1.3Added · Updated
CBE Regulation Book 3.1.3: Credit Risk
The regulation mandates that banks applying the Standardized Approach for credit risk must use credit assessment units from recognized agencies (Standard & Poor's, Moody's, Fitch, Capital Intelligence) for classification. It establishes risk weights for on-balance sheet items based on credit ratings, assigning 0% to sovereigns and central banks, and varying weights (20% to 150%) for development banks, public sector entities, banks, and companies. The text also defines criteria for retail portfolios and SMEs, assigning a 75% risk weight if specific customer, product, debt limit, and diversification conditions are met, with a 100% weight for unrated or non-compliant exposures.
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