Credit Rating Agencies

The European Securities and Markets Authority (ESMA) has today withdrawn the credit rating agency (CRA) registration of the French Beyond Ratings S.A.S. 

The withdrawal decision follows the official notification to ESMA by Beyond Ratings on 31 May 2019 of its intention to renounce its registration under the conditions set out in Article 20(1)(a) of the CRA Regulation. ESMA confirms that Beyond Ratings has effectively stopped its rating activities.

Point (a) of Article 20(1) of the CRA Regulation provides that without prejudice to Article 24, ESMA shall withdraw the registration of a credit rating agency where the credit rating agency expressly renounces the registration or has provided no credit ratings for the preceding six months.

The European Securities and Markets Authority (ESMA) has today withdrawn the credit rating agency (CRA) registration of Moody’s Investors Service EMEA Limited (MIS EMEA - UK).

The withdrawal decision follows the official notification sent to ESMA by MIS EMEA - UK on 24 April 2019 of its intention to renounce its registration as a CRA under the conditions set out in Article 20(1)(a) of the CRA Regulation (CRAR).

 

The request follows another notification that MIS EMEA - UK had ceased all its regulatory activity and had transferred its rating activity to other affiliated MIS CRAs based in the EU, namely in Germany, France and UK. The registration withdrawal is part of Moody’s group’s contingency plans related to Brexit.

 

Point (a) of Article 20(1) of the CRAR provides that without prejudice to Article 24, ESMA shall withdraw the registration of a credit rating agency where the credit rating agency expressly renounces the registration or has provided no credit ratings for the preceding six months.

The European Securities and Markets Authority (ESMA), the EU’s direct supervisor of credit rating agencies (CRAs), has registered today Inbonis SA as a CRA under the CRA Regulation. 

Inbonis SA is based in Madrid, Spain, and intends to issue corporate ratings on corporate issuers not considered a financial institution or insurance undertaking. The registration takes effect from today, 27 May 2019.

The CRA Regulation seeks to ensure that credit ratings issued in the EU meet minimum standards of quality, transparency and independence by providing that only companies registered by ESMA as CRAs may lawfully issue credit ratings which can be used for regulatory purposes by credit institutions, investment firms, insurance and reinsurance undertakings, institutions for occupational retirement provision, management companies, investment companies, alternative investment fund managers and central counterparties. 

To be registered as a CRA, a company must be able to demonstrate to ESMA that it complies with the requirements of the CRA Regulation, which covers inter alia:

  • the governance of CRAs and the management of conflicts of interest;
  • the development and application of methodologies for assessing credit risk; and
  • the disclosure of information to ESMA and to market participants. 

Once registered, CRAs are subject to on-going monitoring and supervision by ESMA to ensure that they continue to meet the conditions for registration. ESMA will impose sanctions where it finds that a CRA has failed to meet its obligations under the CRA Regulation. 

The total number of CRAs registered in the EU is 29 CRAs. Amongst the 29 registered CRAs, four operate under a group structure, totalling 19 legal entities in the EU, which means that the total number of CRA entities registered in the EU is 44.

The Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA - ESAs) published a second amendment to the Implementing Technical Standards (ITS) on the mapping of credit assessments of External Credit Assessment Institutions (ECAIs) for credit risk under the Capital Requirements Regulation (CRR). 

The amendment reflects the outcome of a monitoring exercise on the adequacy of existing mappings. The ITS are part of the EU Single Rulebook for banking aimed at creating a safe and sound regulatory framework consistently applicable across the European Union (EU).

The Implementing Regulation on the mapping of ECAIs under the CRR, adopted by the European Commission on 7 October 2016, specified an approach that establishes the correspondence between credit ratings and the credit quality steps (CQS) defined in the CRR, together with providing mappings for 26 ECAIs.

This amendment to the ITS reflects the outcome of a monitoring exercise on the adequacy of the mappings, based on the additional quantitative and qualitative information collected after the original Implementing Regulation entered into force. In particular, the ESAs proposed to change the CQS allocation for two ECAIs, and to introduce new credit rating scales for ten ECAIs. The ESAs also addressed the mappings of CRAs recently registered in accordance to the CRA Regulation and that are related to previously mapped ECAIs.

The ESAs have published individual draft mapping reports illustrating how the methodology was applied to produce the amended mappings in line with the CRR mandate.

Legal Basis and background

The proposed revised draft ITSs have been developed according to Article 136 (1) and (3) of Regulation 575/2013 (Capital Requirements Regulation), which state that revised draft ITS shall be submitted by the ESAs, where necessary.

A first amendment to the Implementing Regulation was adopted by the Commission on 24 April 2018, to incorporate mappings for the five new ECAIs that had been registered or certified after the ESAs submitted the original draft ITS to the Commission and to reflect the deregistration of one credit rating agency (CRA).

The European Securities and Markets Authority (ESMA) has issued today the official translations of its Guidelines on the application of the endorsement regime under Article 4(3) of the Credit Rating Agencies Regulation.

Guidelines on the application of the endorsement regime for CRAs

BG - Преводът е предоставен от Центъра за преводи за органите на Европейския съюз.

CS - Tento překlad vypracovalo Překladatelské středisko pro instituce Evropské unie.

DA - Denne oversættelse er udarbejdet af Oversættelsescentret for Den Europæiske Unions Organer.

DE - Die Übersetzung erfolgte durch das Übersetzungszentrum für die Einrichtungen der Europäischen Union.

EL - Η παρούσα μετάφραση έγινε από το Μεταφραστικό Κέντρο των Οργάνων της Ευρωπαϊκής Ένωσης.

ES - Texto traducido por el Centro de Traducción de los Órganos de la Unión Europea.