EBA amends Decision on the quality of unsolicited credit assessments of certain ECAIs for the assignment of risk weights
18 July 2017
The European Banking Authority (EBA) published today a revised Decision confirming the quality of unsolicited credit assessments assigned by certain External Credit Assessment Institutions (ECAIs) for calculating institutions' capital requirements. The revised Decision, which reflects the recognition of five additional ECAIs and the de-registering of one ECAI, is part of the Single Rulebook in banking and will ensure regulatory harmonisation across the European Union (EU) regarding the use of unsolicited credit ratings for determining institutions' own funds requirements.
Institutions may use unsolicited credit assessments of an ECAI for determining their capital requirements only if the EBA has confirmed that those unsolicited ratings do not differ in quality from solicited ratings of that same ECAI. On 17 May 2016, the EBA issued a Decision allowing the use of unsolicited credit assessments for 22 ECAIs in the context of the Capital Requirements Regulation (CRR). The revised Decision amends this list in light of the recognition of five additional ECAIs and the de-registering of one ECAI and confirms that unsolicited credit assessments do not differ in quality from solicited ratings. In addition, the revised Decision also considers an ECAI that issued only solicited ratings when the EBA Decision was published and started issuing unsolicited ratings subsequently. The revised Decision is based on a quantitative and qualitative analysis also published today.
The EBA Decision has been developed on the basis of Article 138 of Regulation (EU) No 575/2013 (Capital Requirements Regulation — CRR), which establishes that institutions may use unsolicited credit assessments of an ECAI for the determination of capital requirements only if the EBA has confirmed that those unsolicited ratings do not differ in quality from solicited ratings of that ECAI. In particular, the EBA shall refuse or revoke the confirmation if the ECAI has used an unsolicited credit assessment to put pressure on the rated entity to place an order for a credit assessment or other services.