July 18, 2017

EBA published its future work plan on credit assessments issued by External Credit Assessment Institutions (ECAIs). It also published a revised Decision confirming the quality of unsolicited credit assessments assigned by certain 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 harmonization across the EU regarding the use of unsolicited credit ratings for determining institutions' own funds requirements.

With regard to the work plan, EBA intends to carry out its work on ECAIs following a step-by-step approach. The first phase of the work plan, which focuses on the production of mappings and the treatment of unsolicited credit assessments for newly registered or certified ECAIs, is ongoing. The second phase, which focuses on the monitoring of existing mappings, has started and will continue over time to ensure that the underlying credit assessments continue to reflect and predict the risks of rated exposures in a consistent manner across rating agencies. Under the umbrella of the Joint Committee, ESA will engage with ECAIs, in due course, particularly to gather information on developments registered by ECAIs since their mappings were produced. EBA plans to strengthen the monitoring and quality of such mapping used for the determination of capital requirements, which may be calculated based on the relevant credit assessments produced by the current 25 credit rating agencies (30 in the future).  EBA's future work on ECAIs will focus on the following:

Mapping and decision on unsolicited ratings for newly registered or certified ECAIs as well as assessment of ECAIs originally issuing only solicited ratings and subsequently assigning unsolicited ratings

Monitoring the ECAIs' mappings

Monitoring unsolicited credit assessments of ECAIs covered in the EBA Decision on unsolicited credit assessments

 

Related Links

EBA Work Plan

EBA Decision

Keywords: Europe, EU, Banking, ECAI, Credit Ratings, Capital Requirements, EBA

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