1.The variance of the loss distribution of type 1 exposures as referred to in paragraph 4 of Article 200 shall be equal to the sum ofVinterandVintra.
2.Vinter shall be equal to the following:
V_{\mathrm{inter}} = \sum_{(j,k)} \frac{\mathrm{PD}_k \cdot (1 - \mathrm{PD}_k) \cdot \mathrm{PD}_j \cdot (1 - \mathrm{PD}_j)}{1.25 \cdot (\mathrm{PD}_k + \mathrm{PD}_j) - \mathrm{PD}_k \cdot \mathrm{PD}_j} \cdot \mathrm{TLGD}_j \cdot \mathrm{TLGD}_k
where:
the sum covers all possible combinations (j,k) of probabilities of default on single name exposures in accordance with Article 199;
TLGDj and TLGDk denote the sum of losses -given- default on type 1 exposures from counterparties bearing a probability of default PDj and PDk respectively.
3.Vintra shall be equal to the following:
V_{\mathrm{intra}} = \sum_{\mathrm{j}} \frac{1.5 \cdot \mathrm{PD}_{\mathrm{j}} \cdot (1 - \mathrm{PD}_{\mathrm{j}})}{2.5 - \mathrm{PD}_{\mathrm{j}}} \cdot \sum_{\mathrm{PD}_{\mathrm{j}}} \mathrm{LGD}_{\mathrm{i}}^2
where:
the first sum covers all different probabilities of default on single name exposures in accordance with Article 199;
the second sum covers all single name exposures that have a probability of default equal to PDj;
LGDi denotes the loss-given-default on the single name exposure i.