2026-07-072026-07-07http://salesiana.dossiersoluciones.com/handle/123456789/208787A new methodology for incorporating LGD correlation effects into the Basel II risk weight functions is introduced. This methodology is based on modelling of LGD and default event with a single loss variable. The resulting formulas for capital charges are numerically compared to the current proposals by the Basel Committee on Banking Supervision. Keywords: Regulatory capital charge, loss given default (LGD).9 pages, LaTeXOther Condensed MatterRisk Managementtext