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On 18 November 2016, from 13.00 to 16.00 UK time, the European Banking Authority (EBA) will be holding a public hearing to outline its draft proposals on the European covered bond framework. The hearing comes as a follow-up to the recommendation by the European Systemic Risk Board (ESRB) and ahead of the expected publication of the final report by end of 2016.

These Implementing Technical Standards (ITS) specify the correspondence or ‘mapping’ between credit ratings and credit quality steps that shall determine the allocation of appropriate risk weights to credit ratings issued by ECAIs on securitisations where the Standardised Approach (SA) or the Internal Ratings Based (IRB) approach for securitisations are used. They will be part of the Single Rulebook in banking aimed at enhancing regulatory harmonisation across the European Union (EU) and will allow the credit ratings of all registered credit rating agencies to be used for the purposes of calculating institutions’ capital requirements.

The Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA - ESAs) has published today two draft Implementing Technical Standards (ITS) on credit assessments by External Credit Assessment Institutions (ECAIs). By determining an objective approach for attributing risk weights to the assessments of ECAIs, as well as a prudential approach for those cases lacking factual evidence, these standards will ensure sound credit assessments contributing to financial stability in the EU.