52. For each bucket of a risk indicator ‘ j ’ , the DGS should determine an upper and lower …

For each bucket of a risk indicator ‘ j ’ , the DGS should determine an upper and lower boundary of the value ‘ A ’ of the risk indicator in such a way that member institutions with a similar level of risk are grouped into the same bucket. The DGS should determine the buckets’ boundaries either on a relative or an absolute basis, where:

• a. When using the relative basis, the DGS should distribute member institutions evenly between buckets. The DGS determines the boundaries of the buckets after determining the values ‘ A ’ of the risk indicator of member institutions in the same bucket.
• b. When using the absolute basis, the DGS should determine the boundaries of the buckets to reflect that all values ‘ A ’ of the risk indicator within these boundaries represent a similar level of risk and that all member institutions with a similar level of risk end up in the same bucket.

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

• EBA - Published by the European Banking Authority at https://www.eba.europa.eu/