General Information & Client Services
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
July 23, 2018

ESMA fined five banks for issuing credit ratings without authorization from ESMA and issued five public notices for these banks negligently breaching the Credit Rating Agencies Regulation (CRAR). These banks are Danske Bank, Nordea Bank, SEB, Svenska Handelsbanken, and Swedbank and they were fined EUR 495,000 each (collectively EUR 2.48 million).

Between June 2011 and August 2016, the five banks issued credit research to their clients—and SEB continued to do so until May 2018. This credit research included the issuance of what the banks described as shadow ratings. These reports related to different entities and underlying financial instruments. These reports included opinions, which ESMA found met the definition of a credit rating provided for by the CRAR. However, no bank had acquired the necessary ESMA authorization to issue ratings and such conduct infringes the CRAR, which requires prior authorization. The individual fine amounts take into account the aggravating factor that the banks had committed the infringement for more than six months but also consider the mitigating factor that each bank has voluntarily taken measures to ensure that similar infringements could not be committed in the future. The five banks mentioned above may appeal against this decision to the Board of Appeal of the ESAs. Such an appeal does not suspend the fine, although it is possible for the Board of Appeal to suspend the application of the decision in accordance with the CRAR.

Under the CRAR, issuing credit ratings requires authorization by ESMA to ensure that such ratings are independent, objective, and of adequate quality and that Credit Rating Agencies (CRAs) are subject to the same rules and oversight across all EU countries. A firm, to be registered as a CRA in EU, needs to provide proof that it fulfills the necessary organizational requirements and provides adequate safeguards, in particular regarding governance, conflicts of interests, internal controls, rating process and methodologies, business activities, and disclosures. A failure by a firm to apply for registration prior to issuing ratings is an infringement of the CRAR. None of the five banks was, or is, registered as a CRA nor had they applied for registration. Currently, there are 27 CRAs authorized by ESMA to issue credit ratings within the EU.

 

Related Links

Keywords: Europe, EU, Banking, CRA Regulation, CRA, Enforcement Decisions, ESMA

Related Insights
News

EBA Single Rulebook Q&A: First Update for November 2018

EBA published answers to seven questions under the Single Rulebook question and answer (Q&A) updates for this week.

November 09, 2018 WebPage Regulatory News
News

FED Finalizes the Large Financial Institution Rating System

FED finalized the new supervisory rating system for Large Financial Institutions (LFIs), to better align with the current supervisory programs and practices for these firms.

November 09, 2018 WebPage Regulatory News
News

ECB Publishes Guides for Capital and Liquidity Management by Banks

ECB published the guides for capital and liquidity management by banks in EU.

November 09, 2018 WebPage Regulatory News
News

EC Amends Regulation on Prudent Valuation for Supervisory Reporting

EC published the amended Implementing Regulation (EU) 2018/1627 on prudent valuation for supervisory reporting. Regulation 2018/1627 amends the Implementing Regulation 680/2014.

November 09, 2018 WebPage Regulatory News
News

FED Intends to Publish the Financial Stability Report in November 2018

FED intends to begin publishing a semiannual report presenting its view of the outlook for U.S. financial stability, on November 28. The financial stability report will include a summary of the FED framework for assessing the resilience of the financial system in the United States.

November 09, 2018 WebPage Regulatory News
News

ESMA Asks Clients of CRAs and TRs to Prepare for No-Deal Brexit

ESMA issued a public statement to raise awareness, among the market participants, on the readiness of credit rating agencies (CRAs) and trade repositories (TRs) for the possibility of no agreement being reached in the context of the United Kingdom withdrawing from the European Union (Brexit).

November 09, 2018 WebPage Regulatory News
News

EIOPA Publishes Result of the Work of EU-US Insurance Dialog Project

EIOPA published four papers resulting from the work of the EU–U.S. Insurance Dialog Project (EU-U.S. Project) in 2018.

November 08, 2018 WebPage Regulatory News
News

EIOPA Publishes Q&A on Regulations in November 2018

EIOPA published new sets of questions and answers (Q&A) on implementing and delegated regulations applicable to insurers in Europe.

November 07, 2018 WebPage Regulatory News
News

APRA Finalizes CPS 234 to Help Combat Threat of Cyber Attacks

APRA has released the final version of its prudential standard focused on information security management.

November 07, 2018 WebPage Regulatory News
News

US Agencies Propose Reduced Reporting for Qualifying Institutions

US agencies (FDIC, FED, and OCC) proposed to reduce regulatory reporting burden on small institutions by expanding the number of regulated institutions eligible for streamlined reporting.

November 07, 2018 WebPage Regulatory News
RESULTS 1 - 10 OF 2192