Under prudential regulation, an institution has a large exposure when claims on one counterparty, or on several economically linked counterparties, reach at least one-tenth of its eligible capital. The concept is intended to identify excessive concentration of exposure to a single source of risk. European rules permit measures to restrict such exposures under Article 458 of the Capital Requirements Regulation (CRR).
Source: European Central Bank (ECB) (source). This glossary entry is an independently worded adaptation of the cited information.