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European supervisors agree on the outcome of the informal joint assessment process of three external credit assessment institutions
04 August 2006
Competent supervisory authorities across Europe have reached a shared view on the Fitch Ratings, Standard & Poor?s Ratings Services, and Moody's Investors Service eligibility for regulatory capital purposes and on the mapping of their credit assessments.
As required by the Capital Requirements Directive (CRD), competent authorities have considered whether the methodologies of the three external credit assessment institutions (ECAIs) meet the requirements of objectivity, independence, ongoing review and transparency and that their ratings meet the requirements of credibility and transparency. Furthermore they have considered which of the 'risk weights' should be attached to their ratings (the 'mapping').
Competent authorities have based their assessment on the guidelines published by the Committee of European Banking Supervisors (CEBS). They have adopted a single joint approach to the assessment of those rating agencies, as recommended in the guidelines. The guidelines aim to reduce administrative burden and ensure a level playing field for institutions that use ECAIs ratings for the purposes of the Standardised Approach and the Securitisation Ratings Based Approach to determine the risk weights of their credit exposures.
On the basis of the information provided by the ECAIs, all competent authorities share the view that their credit institutions and investment firms could use the ratings of all three agencies for determining the risk weights of their exposures. Competent authorities have also reached agreement on the mapping.
As the national implementation of the CRD in the member states is still under way, the shared view is informal but forms a strong basis upon which, coherently with their national legal framework, competent authorities will take their final decision on the formal recognition in each jurisdiction. In particular, competent authorities will remain informed about any new developments or may seek further information from an applicant or confirmation of information provided in line with the specifics of national legislation.
The agreement is without prejudice to any applications - current or future - that may be received from other ECAI applicants. They will also be considered on their merits in line with the CRD and on the basis of the CEBS guidelines.
For more information on mapping, please click here
Franca Rosa Congiu
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