For example, if a bank has made short-term and long-term loans totaling $100 million to company A, its credit exposure to company A is $100 million.
In general, a bank will seek to have greater credit exposure to its customers with the highest credit rating, and less exposure to clients with a lower credit rating. If a customer encounters unexpected financial problems, the bank may seek to reduce its credit exposure in order to mitigate the risk of loss arising from a potential default.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
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