The concentration of a bank’s lending among a few individual or interconnected borrowers. Under Basel II, a special risk calculation is required in such cases (for there is a precise link between portfolio lumpiness and risk). Appropriate credit derivatives can be used to mitigate lumpiness risks. – Often, the rules to avoid lumpiness risks were circumvented by setting up several buy-out companies and formally splitting the loans, which was severely reprimanded by the supervisory authorities. – See granularity, group of connected customers, key account, concentration risk, credit derivative, accumulation, submarine effect. – Cf. Monthly Report of the Deutsche Bundesbank of April 2001, p. 26, Monthly Report of the Deutsche Bundesbank of June 2006, p. 35 et seq. (detailed, textbook presentation; overviews).
Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent!
University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/