European supervisors agree on the outcome of the informal joint assessment process of an external credit assessment institution
The eleven1 competent supervisory authorities to whom DBRS informally applied for recognition as an eligible external credit assessment institution (ECAI) in the context of the Capital Requirements Directive have reached a shared view on DBRS' eligibility for regulatory capital purposes and on the mapping of its credit assessments.
As required by the Capital Requirements Directive (CRD), competent authorities considered whether the methodologies of DBRS meet the requirements of objectivity, independence, ongoing review and transparency and that its ratings meet the requirements of credibility and transparency. Furthermore they have considered which of the 'risk weights' should be attached to its ratings (the 'mapping').
The assessment has been based on the guidelines published by the Committee of European Banking Supervisors (CEBS). Competent supervisory authorities involved adopted a joint approach to the assessment as recommended in the guidelines.
On the basis of the information provided by the ECAI, all eleven competent authorities share the view that their credit institutions and investment firms could use DBRS ratings for determining the risk weights of their exposures for the purpose of the Standardised approach the securitisation Ratings Based Approaches. Competent authorities have also reached agreement on the mapping.
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.
It is the fourth informal joint assessment process that has been carried out on the basis of the CEBS guidelines. The aim is 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.
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.
Franca Rosa Congiu