Basel working group suggests "pragmatic" approach to credit risk expected losses

The Basel Committee noted that the IRB approach as outlined in its January consultative paper on Basel II entails capital charges being calibrated to cover both unexpected and expected credit losses in loan portfolios.

The Committee said the capital charge for unexpected losses (UL) is uncontroversial, but the banking industry's reaction to a capital charge for expected losses (EL) is generally negative.

In a paper issued in July, the Committee's Joint Accounting Task Force/Models Task Force

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