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PD
Pillar 1
See also Minimum Capital Requirements. The part of the new Basel Accord, which sets out the calculations of regulatory capital requirements for credit, market and operational risk.
Pillar 2
The part of the new Basel Accord which sets out the process by which a bank should review its overall capital adequacy and the processes under which the supervisors evaluate how well financial institutions are assessing their risks and take appropriate actions in response to the assessments.
Pillar 3
See also Market Discipline and Disclosure. The part of the new Basel Accord, which sets out the disclosure requirements for banks to publish certain details of their risks, capital and risk management, with the aim of strengthening market discipline.
PiT
Point-in-Time - an internal rating system that assesses a counterparty's condition over the course of a specified time horizon, typically its probability of defaulting within one year.
Pooled data
The result of initiatives by banks to combine the results of their internal experience of losses, usually where only limited data is available to individual banks.
Probability of Default
The probability that a counterparty will fail to meet their obligations under a contractual agreement.
Pro-cyclicality
Capital requirements tend to fluctuate with the business economic cycle, rising in a downturn. This increase leads to a further restricting of credit which in turn leads to still higher capital requirements, creating a self reinforcing economic behaviour known as pro-cyclicality.
Provisions
These are liabilities where the company is uncertain as to the amount, or timing of the expected future costs.
Prudential
The exercise of caution e.g. Prudential Regulations are those which legislate capital adequacy and other measures of restraint.
Prudential Sourcebook
The part of the FSA's Handbook that sets out detailed prudential requirements for the banks that they regulate.
PSB
PSE
Public Sector Entity
Any public sector entity, including regional governments, councils and local authorities that have independent revenue raising powers.
QIS
Quantitative Impact Study - carried out by the Basel Committee to gauge the impact on banks of the new requirements.
Qualitative
That pertaining to the quality or nature of something, which is expressed descriptively.
Qualifying revolvers
Forms of lending that are unsecured, revolve (i.e. they do not represent a fixed amount for a fixed time, can be added to and reduced), and are uncommitted (i.e. able to be withdrawn at any time). An example would be a credit card or an overdraft facility.
Quantitative
Something that is expressed as a numeric measure i.e. an amount, ratio or percentage.
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