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      Question

      Banks are expected to identify connected counterparties

      based on economic interdependence when total exposure exceeds what percentage of the eligible capital base?
      A 2% Correct Answer Incorrect Answer
      B 3% Correct Answer Incorrect Answer
      C 5% Correct Answer Incorrect Answer
      D 7% Correct Answer Incorrect Answer
      E 10% Correct Answer Incorrect Answer

      Solution

      If a bank’s exposure to an individual counterparty exceeds 5% of the eligible capital base, it must determine if the entity has economic dependencies with other counterparties that might create concentration risk.

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