Directive 2006/48/EC of the European Parliament and of the council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast) (Text with EEA relevance) (repealed) (c. 48)

ANNEX VII INTERNAL RATINGS BASED APPROACH

PART 4 Minimum requirements for IRB Approach

2. RISK QUANTIFICATION

2.2. Overall requirements for estimation

2.2.3. Requirements specific to own-conversion factor estimates

90. In arriving at estimates of conversion factors credit institutions shall consider their specific policies and strategies adopted in respect of account monitoring and payment processing. Credit institutions shall also consider their ability and willingness to prevent further drawings in circumstances short of payment default, such as covenant violations or other technical default events.