Loss given default (LGD)

Amount in percent of the expected average loss of a credit institution by exposure, in the event of the default of this exposure. The LGD is the ratio between the loss of the exposure and the outstanding amount (at the time of the default of this exposure). Example: Credit amount at default 200 MU (monetary units); and from the sale of collateral, e.g. real estate, 140 MU can still be realised following the deduction of all costs. The LGD is therefore 30 %.