ANNEX VIII U.K. CREDIT RISK MITIGATION

PART 2 U.K. Minimum Requirements

1. FUNDED CREDIT PROTECTION U.K.

1.7. Minimum requirements for treating lease exposures as collateralised U.K.

11. For the exposures arising from leasing transactions to be treated as collateralised by the type of property leased, the following conditions shall be met: U.K.

(a)

the conditions set out in points 8 or 10 as appropriate for the recognition as collateral of the type of property leased shall be met;

(b)

there shall be robust risk management on the part of the lessor with respect to the use to which the leased asset is put, its age and the planned duration of its use, including appropriate monitoring of the value of the security;

(c)

there shall be in place a robust legal framework establishing the lessor's legal ownership of the asset and its ability to exercise its rights as owner in a timely fashion; and

(d)

where this has not already been ascertained in calculating the LGD level, the difference between the value of the unamortised amount and the market value of the security must not be so large as to overstate the credit risk mitigation attributed to the leased assets.