1. Degrees of credit risk, expressed as percentage weightings, shall be assigned to asset items in accordance with Articles 6 and 7, and exceptionally Articles 8 and 11. The balance-sheet value of each asset shall then be multiplied by the relevant weighting to produce a risk-adjusted value.
2. In the case of the off-balance-sheet items listed in Annex I, a two-stage calculation as precribed in Article 6(2) shall be used.
3. In the case of the off-balance-sheet items referred to in Article 6(3), the potential costs of replacing contracts in the event of counterparty default shall be calculated by means of one of the two methods set out in Annex II. Those costs shall be multiplied by the relevant counterparty weigthings in Article 6(1), except that the 100 % weightings as provided for there shall be replaced by 50 % weightings to produce risk-adjusted values.
4. The total of the risk-adjusted values of the assets and off-balance-sheet items mentioned in paragraphs 2 and 3 shall be