EBA confirms quality of unsolicited credit assessments

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 two additional ECAIs and the de-registering of three ECAIs, 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.

Since the last EBA Decision, two additional ECAIs have been recognised, and three ECAIs have been de-registered or de-certified. In addition, a registered ECAI has been renamed. The revised Decision has been amended to reflect these developments and is based on a quantitative and qualitative analysis, also published today.

Legal basis and background

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.

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 EBA Decision was amended on 18 July 2017 to reflect the registration of five additional ECAIs.