CA-5.8.134
Past version: Effective from 01 Apr 2008 to 31 Mar 2011
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Leases that expose the bank to residual value risk will be treated in the following manner. Residual value risk is the bank's exposure to potential loss due to the fair value of the equipment declining below its residual estimate at lease inception.
(a) The discounted lease payment stream will receive a risk weight appropriate for the lessee's financial strength (PD) and CBB's or own-estimate of LGD, which ever is appropriate.
(b) The residual value will be risk-weighted at 100%.
Apr 08