1. 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 of V_{inter}V inter and V_{intra}.V intra .
2. 2.V V_{inter}inter shall be equal to the following:
V_{\mathrm{inter}} = \sum_{(j,k)} \frac{\mathrm{PD}_{\mathrm{k}} \cdot (1 - \mathrm{PD}_{\mathrm{k}}) \cdot \mathrm{PD}_{\mathrm{j}} \cdot (1 - \mathrm{PD}_{\mathrm{j}})}{1.25 \cdot (\mathrm{PD}_{\mathrm{k}} + \mathrm{PD}_{\mathrm{j}}) - \mathrm{PD}_{\mathrm{k}} \cdot \mathrm{PD}_{\mathrm{j}}} \cdot \mathrm{TLGD}_{\mathrm{j}} \cdot \mathrm{TLGD}_{\mathrm{k}}
where:
(a)((a)) the sum covers all possible combinations (j,k) of different probabilities of default on single name exposures in accordance with Article 199;
(b)((b)) TLGDjandTLGDkdenoteTLGD_{j} and TLGD_{k} denote the sum of losses -given- default on type 1 exposures from counterparties bearing a probability of defaultPDjandPDkrespectively.default PDj and PDk respectively.
3. 3.V V_{intra}intra 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:
(a)((a)) the first sum covers all different probabilities of default on single name exposures in accordance with Article 199;
(b)((b)) the second sum covers all single name exposures that have a probability of default equal toPDj;to PD_{j};
(c)((c)) LGDidenotesLGD_{i} denotes the loss-given-default on the single name exposurei.exposure i.