1.This section provides the guidance for the computation of Credit Risk Weighted Assets (CRWAs) under the Standardised Approach (SA). This guidance should be read in conjunction with the Central Bank’s Standard on Credit Risk.

2.A bank must apply risk weights to its on-balance-sheet and off-balance-sheet items using the risk- weighted assets approach. Risk weights are based on credit ratings or fixed risk weights and are broadly aligned with the likelihood of obligor or counterparty default.

3.A bank may use the ratings determined by an External Credit Assessment Institution (ECAI) for credit ratings. In general, banks should only use solicited ratings from recognised ECAIs for the purposes of calculating capital requirement under the SA. However, in exceptional cases, the bank may use unsolicited ratings with the Central Bank approval.

4.Note that all exposures subject to the SA should be risk weighted net of specific allowances and interest in suspense. The guidance must be read in conjunction with Securitisation, Equity Investments in Funds, Counterparty Credit Risk and Credit Valuation Guidance.

5.The guidance set out in this section applies to all exposures in the banking book. Exposures in the trading book should be captured as part of a bank’s market risk capital calculations.