Credit Rating Agencies

The European Securities and Markets Authority (ESMA) has today fined Danske Bank, Nordea Bank, SEB, Svenska Handelsbanken and Swedbank €495,000 each and issued five public notices for negligently breaching the Credit Rating Agencies Regulation (CRAR). ESMA found that the five banks infringed the CRAR by issuing credit ratings without being authorised by ESMA to do so. 

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 and 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 authorisation to issue ratings and such conduct infringes the CRAR which requires prior authorisation.  

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.

Unauthorised credit ratings

Under the CRAR, issuing credit ratings requires authorisation 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, in order to be registered as a CRA in the EU, needs to provide proof that it fulfils the necessary organisational 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 authorised by ESMA to issue credit ratings within the EU.

Right of appeal

The five banks mentioned above may appeal against this decision to the Board of Appeal of the European Supervisory Authorities. 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.


The European Securities and Markets Authority (ESMA) has today issued a consultation paper for revised Guidelines on the information that is to be periodically reported to ESMA by credit rating agencies (CRAs) for supervisory purposes. 

In March 2015, ESMA published its first set of Guidelines on the periodic information that CRAs should submit to ESMA for the purposes of their ongoing supervision. The information received under these Guidelines is key to ensuring that ESMA is capable of efficient and effective supervision of the CRA sector.

However, since the introduction of the Guidelines in 2015, ESMA’s supervisory processes have evolved to a point where the timing, frequency, and format of the information submitted in accordance with the 2015 Guidelines is no longer capable of supporting ESMA’s supervisory processes in an efficient and effective manner. Therefore, ESMA is proposing a revision of the 2015 Guidelines. For CRAs, ESMA anticipates that these Guidelines will introduce greater proportionality in their reporting requirements, as well as greater predictability in their supervisory interactions with ESMA.

The revised Guidelines aim to achieve this through the following:  

  • First, by introducing a revised approach to determining a CRAs’ reporting obligations, that is based upon ESMA’s internal risk assessment; 
  • Second, by proposing greater differentiation in the reporting frequencies for CRAs, to ensure more proportionate reporting requirements for different entities;
  • Third, by providing more specific reporting instructions for a number of existing reporting requirements, to improve the consistency of the information currently provided;
  • Fourth, by introducing a number of new periodic reporting requirements to support ESMA’s supervisory activities, to reduce the need for ESMA to submit ad-hoc requests for information;
  • Fifth, by introducing standardised reporting templates for a number of new and existing reporting requirements, to ensure a streamlined approach to reporting for CRAs and a higher level of usability of the information received.

In proposing these revisions, the Consultation Paper takes a step by step approach to each area of the Guidelines. First, describing the approach under the 2015 Guidelines, second, explaining the relevance of any periodic information to ESMA’s supervisory processes and, third, outlining the changes ESMA is proposing in order to address any problems or introduce any improvements.

Further details

Comments on the Consultation Paper until 26 September 2018. Following this, it is expected that ESMA will publish the Final Report on the Guidelines before the end of 2018.