Macroprudential policy and financial stability glossary

An institution's exposure to a client or group of connected clients, the value of which is equal to or exceeds 10% of its eligible capital. Limits to large exposures can be implemented in Europe via Article 458 CRR.

large and complex banking group

See liquidity coverage ratio (LCR)

The Basel III leverage ratio is defined as Tier 1 capital divided by the bank’s total exposure, expressed as a percentage. The prudential use of a leverage ratio limit is intended to restrict the build-up of leverage in the banking sector and to strengthen the risk-based requirements by adding a simple, non-risk-based backstop.

loss-given-default

A short-term liquidity requirement which aims to ensure that credit institutions hold sufficient high-quality liquid assets to withstand an acute stress scenario lasting 30 days. It has been implemented in Europe via the Commission Delegated Regulation (EU) 2015/61. The LCR is calculated in accordance with the following formula: liquidity buffer ÷ net liquidity outflows over a 30 calendar-day stress period = liquidity coverage ratio %. Credit institutions must maintain a liquidity coverage ratio of at least 100%.

A ratio of the amount borrowed to the total annual income of a borrower.

The ratio of the amount borrowed to the appraised value or market value of the underlying collateral, usually taken into consideration in relation to loans for real estate financing.

loan-to-deposit

long-term guarantee

loan-to-income

loan-to-stable-funding

loan-to-value