ESAs ECAI Credit Assessment Mapping

On Nov. 13, ESAs issued standards on mapping of credit assessments.

  • ESAs - EBA, EIOPA, ESMA - published final reports on draft implementing technical standards (ITS) amending implementing regulation 2016/1799 on mapping of external credit assessment institutions (ECAIs) under article 136(1),(3) of regulation 575/2013.
  • And amending Reg 2016/1800 on allocation of credit assessments of external credit assessment firms to an objective scale of credit quality steps under Dir 2009/138/EC.
  • The amendments reflect the outcome of a monitoring exercise on the adequacy of existing mappings, and the deregistration of three credit rating agencies (CRAs).
  • Follows EBA, ESMA, EIOPA May 2023 issued draft ECAI mapping ITS, see #173981.
  • Overview
  • In the amended ITS, the ESAs proposed to change the credit quality step (CQS) allocation for 4 ECAIs, and introduce new/amended credit rating scales for 7 ECAIs.
  • The amended ITS no longer contain mapping tables for the 3 ECAIs, whose licenses since been revoked; ESAs published individual draft mapping reports illustrating how the methodology was applied to produce amended mappings per the CRR mandate.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.
  • 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).
  • Amended ITS delivers on the mandate assigned to ESAs joint committee to monitor adequacy of existing ECAIs mappings; ITS are part of EU Single Rulebook for banking, insurance for a safe, sound regulatory framework consistently applicable across EU.
  • Legal Basis
  • The proposed revised draft ITSs have been developed according to art. 136(1), (3) of CRR 575/2013 and of article 109(a) of the Solvency II directive 2009/138/EC.
  • These state that revised draft ITS shall be submitted by the ESAs where necessary.
  • Jul. 2024 EC Adoption
  • On Jul. 1, 2024, EU CMSN adopted the final draft implementing technical standards amending Reg 2016/1799 (C(2024)4430) and Reg 2016/1800 (C(2024)4431).
  • Regulations in force on 20th day following publication in the Official Journal of the EU.
  • Jul. 2, 2024 Official Journal
  • On Jul. 2, 2024, EU CMSN issued final Reg 2024/1820 amending ITS Reg 2016/1800.
  • Regulation in force on the 20th day following OJ publication, Jul. 22, 2024.
  • Jul. 5, 2024 Official Journal
  • On Jul. 5, 2024, EU CMSN issued final Reg 2024/1872 amending ITS Reg 2016/1799.
  • Regulation in force on the 20th day following OJ publication, Jul. 25, 2024.

Entity Types B/D; Bank; CRA; Ins
Reference OJ L, 7/5/2024; OJ L, 7/2/2024; PR, Reg 2024/1820, C(2024)4430, C(2024)4431, 7/1/2024; Rp JC 2023 049, JC 2023 050, PR, 11/13/2023; Reg 2016/1799; Reg 2016/1800; CRD/CRR Dir 2013/36, Reg 575/2013; CRR II Reg 2019/876; SLV2 Reg 2015/35, Dir 2009/138; Citation: Reg 2016/1799; Reg 2016/1800; C(2024)4430; C(2024)4431; Reg 2024/1820; Reg 2024/1872;
Functions Compliance; Financial; Legal; Operations; Reporting; Research; Risk; Treasury
Countries European Union
Products Banking; CRA; Insurance
Regions EMEA
Rule Type Final
Rule Date 11/13/2023
Effective Date 7/22/2024
Rule Id 191279
Linked to Rule :173981
Reg. Last Update 7/5/2024
Report Section EU

Last substantive update on 07/09/2024