ESAs publish amended technical standards on the mapping of External Credit Assessment Institutions

The Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) today published two amended Implementing Technical Standards (ITS) on the mapping of credit assessments of External Credit Assessment Institutions (ECAIs). The amendments reflect the outcome of a monitoring exercise on the adequacy of existing mappings, and the deregistration of three credit rating agencies (CRAs).

In the amended ITS published today the ESAs are proposing to change the credit quality step (CQS) allocation for four ECAIs, and to introduce new or amended credit rating scales for seven ECAIs. Further, the amended ITS no longer contain mapping tables for the three ECAIs, whose licenses have been revoked since the previous amendment. The ESAs have published individual draft mapping reports illustrating how the methodology was applied to produce the amended mappings in line with the Capital Requirements Regulation (CRR) mandate.

Background

The implementing technical standards on ECAIs aim to ensure that EU-based financial institutions may only use external credit assessments for the calculation of their capital requirements when these are issued or endorsed by recognized institutions. To this end, the ESAs developed an approach to map credit assessments to the credit quality steps as defined in EU regulations for banking (CRR) and insurance (Solvency II Directive).

The amended ITS continue delivering on the mandate assigned to the Joint Committee of the ESAs to monitor the adequacy of existing ECAIs mappings. The ITS are part of the EU Single Rulebook for banking and insurance aimed at creating a safe and sound regulatory framework consistently applicable across the European Union (EU).

Legal Basis

The proposed revised draft ITSs have been developed according to Article 136 (1) and (3) of Regulation 575/2013 (Capital Requirements Regulation) and of Article 109 (a) of Directive 2009/138/EC (Solvency II Directive), which state that revised draft ITS shall be submitted by the ESAs, where necessary.