Landesbanken to offer credit loss database to third parties

Three of Germany's largest Landesbanken and the consultancy BearingPoint are planning to bring a credit loss database (CLD) that they are developing jointly to the market in the second half of this year. The tool is being designed to comply with the new international bank capital Accord, Basel II, set to come into force in 2006.

Basel II offers banks the prospect of lower regulatory capital charges under its advanced measurement approaches (AMA). But these require sophisticated internal risk measurement parameters such as internal credit ratings and loss-given default (LGD) estimates. The related data quality and reporting rules are stringent and complex. LGD calculations, for example, require a historical seven-year data series and the economic loss must be reported.

“The key challenge is to gather a complete set

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