The Graveyard of Authorized Credit Rating Agencies in the European Union

Agencies, Authorities, Certifications, Registrations

Rating agencies have been registered in the European Union since 2010 in order to operate in accordance with the EU regulation on rating agencies of 2009 (CRAR). Dozens of agencies have therefore made use of the option, but also the obligation, to register or get certified. Rating agencies are only allowed to operate in the European Union after authorization, namely registration or certification.

A public list is kept at the European Securities and Markets Authority (ESMA) on the registered or certified agencies. This list is an important reference for all market participants in order to find out about the approved agencies.

In order to make it easy to find it, the list of authorized credit rating agencies was linked e.g. from the website everling.de from the beginning. Since 1998, long before the word “blog” found its way into the German language, the website everling.de has been dealing with credit rating issues and the statutory or voluntary regulation and self-regulation of credit rating agencies.

It is less well known that a number of rating agencies have now returned their licenses. The return of licenses was particularly evident through brexit, when all those rating agencies that are based in Great Britain and were registered there could no longer be recognized by ESMA.

The following is a complete list of 16 de-registered or de-certified credit rating agencies as of May 7, 2021:

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Credit Rating Agency Authorisation 2021

Agencies, Authorities, Certifications, Registrations

Links to websites of the Credit Rating Agencies authorized in the European Union.

The credit rating agencies listed below have been registered or certified by the European Securities and Markets Authority (ESMA) in accordance with the Credit Rating Agencies Regulation. Domains of websites are added. According to ESMA, the list was last updated on May 7, 2021.

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S&P And Moody’s Are Losing Market Share in the EU

Agencies, Certifications, Read, Registrations, Regulations

For the first time, the European Securities and Markets Authority ESMA has reported a decline in market shares in Europe for both of the major US rating agencies. The authority thus discloses a remarkable development. Never before have the two market leaders, who have been issuing their credit ratings worldwide according to recognized standards and criteria for around 100 years, had to give up market shares in favor of agencies that have their headquarters in Europe.

In addition to European agencies, the winners include competitors of the two market leaders Standard & Poor’s and Moody’s in the USA, namely Fitch Ratings with a market share that has increased from 16.62% to 17.55%, and DBRS Ratings, with a market share of 2.46% which increased to 2.99%. The Canadian DBRS Ratings was taken over by Morningstar, a US rating agency that is the undisputed leader in the rating of mutual funds. The insurance specialist A.M. Best Rating Services could also increase its market share, from 0.82% to 0.95%. A.M. Best Rating Services shows, how the decades-long focus on the insurance industry pays off in order to be increasingly perceived in the market as a Credit Rating Agency (CRA). All five agencies named are controlled by parent companies in the United States.

According to the European Securities and Markets Authority ESMA, the largest rating agencies domiciled in Europe still do not each have a full percentage point market share of the European rating market. The largest rating agencies with roots in Europe are the Italian-based Cerved Rating Agency and The Economist Intelligence Unit, which belongs to the Economist Group in London. While the Italian agency, which also offers its services in the European Union, improved from 0.81% to 0.84%, The Economist Intelligence Unit suffered a market share loss from 0.87% to 0.79%. However, this should be understood against the background that The Economist Intelligence Unit shows a clear focus on micro and macroeconomic research and is known for country ratings, i.e. not for ratings for issues and issuers from the group of industrial companies, financial service providers – i.e. banks in particular and insurance companies – and does not compete in the rating of asset-backed securities, etc. The bottom line is that practically nothing has changed in the market shares of the two largest European agencies in the overall European market.

Among the five types of credit ratings distinguished by ESMA, The Economist Intelligence Unit only offers ratings in the “Sovereign and Public Finance” sector. In the other four market segments this agency does not compete with competitors within the European Union. A.M. Best Europe Rating Services achieves its market share only through the activities of this agency in the “Corporate Non-Financial” and “Corporate Financial” market segments (the latter includes the insurance industry). The market share of Cerved Rating Agency must also be analyzed against the background that this agency only reports ratings in the “Corporate Non-Financial” segment and is not in direct competition with other competitors in the other four market segments.

Remarkable changes – if you disregard the reduction in the market shares of S&P Global Ratings Europe and Moody’s Investors Service – there are only among the “further ran”. For example, a rating agency in Berlin superseded Creditreform Rating, ranking 8th. This is remarkable because Creditreform Rating, as a subsidiary of Creditreform AG in association with the Verband der Vereine Creditreform e.V. in Germany, has a very strong brand name and can rely on over 158,000 members of the association worldwide. While Creditreform Rating only has a market share of 0.53%, previously 0.55%, the Berliners now make it to 0.62%, previously 0.49%. This corresponds to a growth in market share of more than a fifth within a year. It remains, however, that of the agencies based in Germany, the one with the largest market share only occupies eighth place in the European Union.

In contrast to A.M. Best Europe Rating Services, Cerved Rating Agency, The Economist Intelligence Unit and Creditreform Rating, Berlin’s Scope Ratings accepts rating orders from any type of issuer, including in the “Corporate Insurance” market segment that is not served by Creditreform Rating, for example. Through so-called “rating shopping”, issuers look for the agency that is best able to serve their interests. If an agency does not even offer certain ratings, the rating agency concerned cannot benefit from this earnings effect from “rating shopping”.

In contrast to all other agencies, the Berlin agency sees itself as – quote – “the leading European provider of independent credit ratings” with a market share of 0.62%. This claim is due to the tireless work over the past 20 years, which was not discouraged by the bankruptcy of the previous agency FondScope, from which today’s agency Scope Ratings emerged. Over the past two decades, the agency has not yet been able to generate profits in any year, but annual deficits have accumulated. The permanent losses are borne by a small group of well-known personalities, financially strong institutional investors and strategically motivated shareholders of rated companies.

There are no really noticeable movements among the other agencies, if one also takes into account that some agencies have given up in the meantime and thus also have given up market share. The dynamic growth of Kroll Bond Rating Agency Europe deserves special mention, as the agency increased its market share tenfold from 0.03% to 0.34%. With this market share, Kroll Bond Rating Agency Europe is now the largest rating agency ahead of all the other 17 names in the last places in Europe.

If one measures the market share not in terms of the sales achieved, but in terms of the sheer number of financial instruments for which ratings were given, an even more differentiated picture emerges. The market shares in the “Structured Finance” segment, which is so important for rating agencies, have shifted significantly in favor of Scope Ratings: While the Berlin agency only achieved a market share of 1.2% in the previous year, it was up 1.5% in 2019, while Moody’s market share fell from 59.5% to just 55%. In this market, Fitch Ratings is in second place with 44.5% (after 45.0%), S&P with a slightly increased 37.5% (after 35.8%) and DBRS with 14.3% also better than before (13.9%). According to this statistic, the market shares do not add up to 100% since the same financial instruments can be assessed by several agencies.

Anyone who already has a rating from Moody’s or S&P can afford to add the rating of a lesser-known, local agency without having to expect any disadvantages when placing the bond, especially not if a smaller agency delivers an even more favorable credit rating. An example of this is given by the issuer Grenke, who received a long-term rating of BBB+ from Standard & Poor’s, but A from GBB Rating, domiciled in Germany.

According to Article 8d of the EU Regulation on Credit Rating Agencies, the European Securities and Markets Authority ESMA is only required to calculate the market shares of the rating agencies it supervises. Therefore, there is no information in the authority’s document on the absolute basis on which the figures were calculated. Since the market shares in the EU are only calculated on the basis of the figures that must be reported to ESMA, the relevant world market shares are actually considerably lower than the EU market shares calculated by the EU authority.

If, for example, the 57 Chinese rating agencies or even the more than 200 other rating agencies worldwide based outside Europe and with no activities in the European Union market were included in the calculation, the world market shares for the 27 agencies recorded in the EU in 2019 would naturally be considerably lower.

According to Section 267, the German Commercial Code describes the size classes of companies that are exempt from certain disclosure obligations. Small corporations are those that do not exceed at least two of these three criteria: total assets of € 6 million, sales of € 12 million in the twelve months prior to the reporting date or an annual average of fifty employees; medium-sized corporations are those that exceed at least two of the three characteristics specified in paragraph 1 and do not exceed at least two of the three following characteristics: € 20 million balance sheet total, € 40 million revenue in the twelve months before the reporting date or an annual average of two hundred and fifty employees.

The agencies based in Germany – even the ones describing themselves as “leading” – do not exceed these thresholds, so that, unlike the US agencies, they are not obliged to disclose their financial statements. From this fact it can be concluded that these German agencies are located at most in the range of one thousandth of the sales volume of the market leaders S&P Global and Moody’s, especially since the German agencies – unlike the US American giants – are almost unknown in Africa, Asia and America. Moody’s, for example, has a global presence with more than 11,400 employees in 33 offices around the world and serves customers in more than 100 countries.

Moody’s Corporation recorded TTM (Trailing Twelve Months) sales of US $ 5.3 billion in the third quarter of 2020 with an operating profit margin of around 45%. S&P Global achieved even higher total sales, with a large part being generated by services beyond credit rating services. For example, S&P has secured market dominance by taking over IHS Markit for US $ 44 billion. All agencies established in Europe are far from being able to participate in these business arenas, which are important for institutional investors as well as for public and private issuers. Moody’s secured e.g. In 2017, with the takeover of Bureau van Dijk, information on around 375 million companies, so Moody’s can be considered the most important point of contact for company data.

In this respect, S&P Global Ratings with a market share of 40.40% in the EU alone (previously 42.09%) and Moody’s Investor Service with a market share of 33.12% (previously 33.39%) are unlikely to see the market share gains of the small agencies as a dangerous “game changer”, even if Scope Ratings has already collected data on hundreds of companies and has formed its own opinions on many issuers. Especially since these rating classifications from the Berlin agency hardly differ – if available – from the ratings of the market leaders, there is no disruptive effect and no reason for investors to concern themselves with these ratings. More than 70% of all sales in the recognized ratings business in the European Union remain on the books of Moody’s and S&P, and if you add Fitch Ratings, more than 90% of all payments from Europe go to these three US agencies alone .

Hardly any professional investor knows to enumerate smaller rating agencies supervised by ESMA, let alone report on their current ratings. In the practice of the financial markets, most of these small agencies really do not play any role. With a combined market share of more than 90%, the importance and role of the three leading US agencies S&P, Moody’s and Fitch Ratings are therefore still significantly underestimated, because the sales do not reflect the interests of investors, who mainly rely on the opinions of these experienced rating agencies. If a smaller credit rating agency is commissioned by an issuer to develop and disseminate a rating, this says nothing about the effectiveness of this mandate. Because of the small number of ratings issued, there is no statistical, scientifically based evidence that ratings from these small agencies bring the assessed issuer a significant cost advantage.

Since the fees charged to rating agencies by the European Securities and Markets Authority are calculated based on their business volume, the leading US agencies have an interest to report low sales volumes to ESMA. Thus their market shares in the EU appear as low as possible. Additional fees for other services are charged by their other subsidiaries. Accordingly, the market shares of the smallest agencies are overestimated, because they are not burdened with proportionally higher administrative fees from their supervisory authority when reporting higher sales. This is due to the fee table applicable to the smaller agencies. In addition, the mini-agencies have an interest in being reported with high market shares to comfort their partners or shareholders, who are plagued by ongoing losses of their rating enterprise.

The highly complex EU regulation of rating agencies, which was launched in 2009 with the aim of breaking the US oligopoly, has not changed the fact that only the leading agencies provide issuers with the required “entry ticket” to the world financial markets. Nothing has changed in their dominance – on the contrary: the market share of these three agencies, S&P, Moody’s and Fitch Ratings, was 87.02% in 2012, and now is 91.07%, even higher than it was when politicians in Europe believed that the opportunity of the financial crisis could be used to restrict the power of US credit rating agencies. After a lost decade, it is time to think about deregulation and finally to abolish the privileges granted to all agencies registered or certified in the EU.

How the Authority Determines Whether a Board Member Has Sufficient Time

Certifications, Read, Registrations, Regulations

Within the scope of the Banking Act, the notification of intent to appoint a management board member must include the material facts for an assessment of whether sufficient time is available for the performance of the related duties. Board members are required to provide detailed information on how they spend their time. It is at the discretion of the authority to decide to what extent the reported time is spent privately or professionally.

The German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) provides information on what information has to be provided on how a board member spends his time. It is laid down in its Guidance Notice on management board members. This is pursuant to the German Banking Act (Kreditwesengesetz – KWG), the German Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz – ZAG) and the German Capital Investment Code (Kapitalanlagegesetzbuch – KAGB).

This information has to be provided on the form “Details of reputation, available time and additional mandates”. As a rule, BaFin assumes that a person will only accept an appointment as a management board member if he or she considers himself or herself capable of fulfilling the time requirements associated with this activity. Accordingly, this person has to conduct an overall review of all of his or her current activities and mandates and estimate the amount of time associated with this new activity.

The following guidance notes shall be complied with in notifying BaFin of whether this person has sufficient time. All activities and mandates, including the mandate subject to notification, are to be included. The time required to perform these activities and mandates is to be estimated and disclosed to BaFin as such.

All of the management board member’s full-time and part-time professional activities must be indicated. All mandates in administrative and supervisory bodies must also be included. The amount of time required for a mandate on an advisory council must be indicated if the duties and powers of this advisory council are analogous to those of an administrative or supervisory body and are regulated by law or in the articles of association or the partnership agreement.

In the case of mandates in administrative and supervisory bodies, in addition to

  • the time needed to take part in meetings,
  • the time required for meeting preparation and
  • postmeeting work

is to be taken into account, as is participation in committees and

  • travel, where applicable.

The assessment shall also reflect the fact that an activity as a member of an administrative or supervisory body will also take up time outside the scope of regular meetings and that this time requirement may suddenly increase if the undertaking is faced with extraordinary situations.

As a rule, purely voluntary positions and activities which form part of the person’s private life need not be included. The private life of the board member might be carefully analyzed if there is any doubt about his ability to devote sufficient time to the task assigned to him.

A management board member shall report without delay any commencement and any termination of an activity as a management board member of another undertaking or as a member of the administrative or supervisory body of another undertaking. This notification is necessary so that BaFin is able to regularly assess compliance with the limitations of mandates under supervisory law as well as the need for the person to have sufficient time available. This notification obligation applies irrespective of whether or not individual mandates are included in the maximum number of mandates permitted.

Mandates on non-mandatory supervisory boards must also be indicated. Mandates on advisory councils must be indicated if the duties and powers of the advisory council are analogous to those of an administrative or supervisory body and are regulated by law or in the articles of association or the partnership agreement. It is also irrelevant for the notification obligation whether an activity is part-time or full-time in nature.

Where multiple mandates held by the management board member are considered to be a single mandate, this has to be documented by means of supporting statements or documents. In case of mandates held as a representative of the German federal government or the German federal states, the relevant basis in law has to be indicated or the relevant articles of association are to be appended. For an assessment of whether the member of the administrative or supervisory body has sufficient time available, the notification must provide relevant details, including the new mandate

A management board member shall report without delay any acquisition or disposal of a direct participating interest in an undertaking and any changes in the amount of this participating interest. A direct participating interest shall be deemed to be the holding of at least 25 per cent of the undertaking’s capital.

BaFin points out that a violation of the management board member’s notification obligations under the Banking Act and the Capital Investment Code will constitute an administrative offence which may result in an administrative fine of up to one hundred thousand euros. Violation of the notification requirement means failing to make a notification or making such notification incorrectly, incompletely or not in due time.

Management Board Members Must Submit a Certificate of Good Conduct for Official Purposes

Certifications, Read, Registrations, Regulations

Depending on their nationality and place of residence, management board members must submit the original copy of a “certificate of good conduct for presentation to a German authority (certificate of good conduct for official purposes)” (document type “O”) issued by the Federal Office of Justice (Bundesamt für Justiz – BfJ). This document is issued in accordance with section 30 (5) of the German Federal Central Register Act (Bundeszentralregistergesetz – BZRG). Alternatively, it could be a “European certificate of good conduct for presentation to a German authority” in accordance with sections 30 (5) and 30b of the BZRG or certificates of good conduct equivalent to those named above, or certifications of reputation assessments performed by supervisory authorities in the country of residence after consultation with the relevant division of BaFin (“equivalent documents”).

The German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) provides information on what certificate is used to establish a bank management board member’s reputation rating in its Guidance Notice on management board members. This is pursuant to the German Banking Act (Kreditwesengesetz – KWG), the German Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz – ZAG) and the German Capital Investment Code (Kapitalanlagegesetzbuch – KAGB).

Management board members who have resided in different countries in the previous ten years must submit certificates of good conduct and relevant documents from each country. The relevant division of BaFin has to be provided with detailed information regarding any legal obstacles to their furnishment. If the relevant documents are already available, they have to be submitted to BaFin together with the other documents to be appended to the notification of intent. However, subsequent submission is also possible.

In countries in which certificates of good conduct are issued by a public agency, other documents may not be used as a substitute. The “certificate of good conduct for presentation to a German authority” should not be confused with the “extended certificate of good conduct” referred to in section 30a of the BZRG.

Section 30a of the BZRG determines the following: An extended certificate of good conduct is issued to a person on request, if the grant is provided for in statutory provisions with reference to this provision or if this certificate of good conduct is required for professional or voluntary supervision, care, education or training of minors or an activity which, in a manner comparable to letter a, is suitable for making contact with minors. Anyone who applies for an extended certificate of good conduct must submit a written request in which the person who requests the extended certificate of good conduct from the applicant confirms that the requirements are met.

Every person who has reached the age of 14 is given a certificate on the contents of the register concerning them on request (certificate of good conduct). If they have legal representation, this is also entitled to apply. The application must be submitted in writing to the registration authority in person or with an officially or publicly certified signature. When submitting the application, the identity and, in the case of legal representation, the power of representation must be proven. The applicant and their legal representative cannot be represented by an authorized representative when submitting the application. The registration authority receives the fee for the certificate of good conduct, keeps two fifths of it and pays the remaining amount to the federal treasury.

If the person making the application lives outside Germany, they can submit the application directly to the registry authority. Sending the certificate of good conduct is only permitted to the applicant. If the certificate of good conduct is requested to be presented to an authority, it must be sent to the authority immediately. The authority must allow the applicant to inspect the certificate of good conduct upon request. The applicant can demand that the certificate of good conduct, if it contains entries, is first sent to a local court designated by him for inspection by him. The registration authority must inform the applicant of this possibility in the cases in which the application is submitted to them. The district court may only grant the applicant person access to it personally. After inspection, the certificate of good conduct is to be forwarded to the authority or, if the applicant objects, to be destroyed by the local court. A foreign applicant can demand that the certificate of good conduct, if it contains entries, is first sent to an official representation of the Federal Republic of Germany designated by him for inspection.

The management board member must submit a request for a “certificate of good conduct for presentation to a German authority” and a “European certificate of good conduct for presentation to a German authority” to his or her local registration office (Meldebehörde) (section 30 (2) sentence 1 of the BZRG) or electronically to the Federal Office of Justice (section 30c of the BZRG). German nationals who reside outside the Federal Republic of Germany may apply directly to the Federal Office of Justice as the registration authority (section 30 (3) sentence 1 of the BZRG).

To allow BaFin to allocate the certificates of good conduct which it receives to the undertaking to which the relevant management board member is to be appointed, the name of the notifying undertaking and the BAK number have to be indicated as the reference. The BAK number is a six-digit number which BaFin assigns to each institution for internal classification purposes. It forms part of the BaFin reference number under which correspondence with an institution is registered and is listed in BaFin’s database of undertakings as the “ID”. BaFin is responsible for issuing and publishing a BAK number. The BAK number of an institute can be found on the website of the Federal Financial Supervisory Authority (www.bafin.de).

The certificate of good conduct for official purposes must be up-to-date, i.e. at the time of notification of intent it may not be more than three months old. The date of the document’s issue will be key for this purpose.

In the event that a certificate of good conduct is to be used within BaFin for further checks as to the reputation of a person, this document may not be more than twelve months old. The Federal Office of Justice will send both the “certificate of good conduct for presentation to a German authority” and the “European certificate of good conduct for presentation to a German authority” directly to BaFin. There is no need to request additional copies for the Deutsche Bundesbank or the auditing association, in the case of credit institutions that are members of one.

Data for Bank Management Board Member’s Reputation Rating

Certifications, Criteria, Read, Registrations, Regulations

The German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) provides some insights into what kind of data is used to establish a bank management board member’s reputation rating in its Guidance Notice on management board members. This is pursuant to the German Banking Act (Kreditwesengesetz – KWG), the German Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz – ZAG) and the German Capital Investment Code (Kapitalanlagegesetzbuch – KAGB).

On the form “Details of reputation, available time and additional mandates“, the management board member has to issue a personally signed and dated declaration providing information on any criminal proceedings and proceedings for administrative offences, decisions under trade law and insolvency or enforcement proceedings. The declaration need not include previously pending criminal proceedings that were terminated for lack of sufficient evidence to support the suspicion of a criminal offence. The same is true in the event that the proceedings were terminated because of a procedural bar.

The declaration need not include previously pending criminal proceedings which resulted in an acquittal or by virtue of which an entry in the Federal Central Criminal Register (Bundeszentralregister – BZR) was deleted or cancelled, or that are not required to be disclosed according to section 53 of the German Federal Central Register Act (Bundeszentralregistergesetz – BZRG).

Section 53 of the Act on the Central Criminal Register and the Educative Measures Register determines convicted person’s duty of disclosure: Convicted persons may refer to themselves as having no previous convictions and need not disclose the facts on which a conviction was based if the conviction does not have to be included in the certificate of good conduct or only in a certificate of good conduct in accordance with section 32 (3) or (4) BZR or is to be deleted. Insofar as courts or authorities have a right to the unrestricted disclosure of information, convicted persons may derive no rights from subsection (1) no. 1 vis-à-vis them if they are instructed about this fact.

Entries which must be deleted from the Central Trade and Industry Register under section 153 of the German Industrial Code (Gewerbeordnung – GewO) need not be mentioned. Section 153 determines that certain entries have to be deleted after a period of time of three years if the amount of the fine does not exceed 300 euros or five years in the other cases. If the register contains several entries, the deletion of an entry is only permissible if the period has expired for all entries. An entry to be deleted will be removed from the register one year after the requirements for the deletion have been met. During this time, no information may be given about the entry. If the entry in the register has been deleted or if it is to be deleted, the administrative offense and the fine decision may no longer be used to the detriment of the person concerned. This does not apply if the person concerned applies for admission to a trade or other economic enterprise, if the admission would otherwise lead to a considerable risk to the general public, or if the person concerned applies for the lifting of a business or other economic enterprise that prohibits the exercise of the trade Decision requested.

According to these stipulations, entries which must be deleted from the Central Trade and Industry Register under section 153 GewO need not be mentioned. On the other hand, criminal proceedings terminated under sections 153 and 153a of the German Code of Criminal Procedure (Strafprozessordnung – StPO) have to be indicated.

A termination under these provisions will not eliminate the assumption of innocence under criminal law; however, irrespective of this the circumstances of the case may give rise to indications for a lack of reputation, particularly in case of proceedings associated with punishable violations of relevant supervisory law, property- or insolvency-related criminal offences or tax offences.

Similar situations in other jurisdictions also have to be indicated. In case of doubt, the relevant division of BaFin should be contacted. These details have to be complete and accurate. In the case of any notifiable proceedings, copies of the rulings, decisions, sanctions, notices or other relevant documents have to be appended. BaFin reserves the right to obtain further information from the competent authorities, where necessary

For an assessment of possible conflicts of interest, on the form “Details of reputation, available time and additional mandates” the management board member must also declare any familial relationships with members of the management and the members of the administrative or supervisory body, both for the notifying undertaking and for its parent undertaking or subsidiary. If no details are provided on the form, this will be deemed a statement of “nil”.

On the form “Details of reputation, available time and additional mandates”, business relationships which could result in a certain degree of commercial dependence on the notifying undertaking have to be indicated as follows: Management board member, undertaking which is managed by the management board member, close relatives of the management board member = spouses, registered life partners, partners in a long-term relationship, children, parents, other relatives who belong to the household of the member. The relationships to the notifying undertaking, parent undertaking of the notifying undertaking and subsidiary of the notifying undertaking have to be disclosed. The nature of this relationship and the manner in which it is conducted have to be described. If no details are provided on the form, this will be deemed a statement of “nil”.

man in blue suit

Professional and Personal Requirements for Persons Appointed as Management Board Members

Certifications, Compliances, Read, Registrations, Regulations

The Federal Financial Supervisory Authority of Germany (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) provided a Guidance Notice on management board members pursuant to the German Banking Act (Kreditwesengesetz – KWG), the German Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz – ZAG) and the German Capital Investment Code (Kapitalanlagegesetzbuch – KAGB). The following introduces the approach how to check compliance with the law in the context of a forensic rating of financial institutions.

The methodology applies to all credit institutions and financial services institutions supervised by Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht- BaFin) under the Banking Act (Gesetz über das Kreditwesen – KWG) and all payment and electronic money institutions supervised by BaFin under the Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz – ZAG). It is also intended for undertakings supervised by BaFin under the Capital Investment Code (Kapitalanlagegesetzbuch – KAGB). The Banking Act, the Payment Services Supervision Act and the Capital Investment Code impose stringent requirements regarding the qualifications of a management board member. The major significance of these requirements is reflected in the fact that it is the claim of BaFin to issue a licence only when all conditions are met to conduct banking business and e-money business and to provide financial services and payment services.  The licences under the Investment Code, too, are only issued if the management board members fulfil the professional and personal requirements stipulated in the respective law. BaFin may withdraw this licence if these requirements are no longer fulfilled.

The European provisions were enshrined in the Banking Act through the ” Act on the Implementation of the Directive 2013/36/EU on Access to the Activity of Credit Institutions and the Prudential Supervision of Credit Institutions and Investment Firms and on the Regulatory Alignment to the Regulation (EU) No 575/2013 on Prudential Requirements for Credit Institutions and Investment Firms” (Gesetz zur Umsetzung der Richtlinie 2013/36/EU über den Zugang zur Tätigkeit von Kreditinstituten und die Beaufsichtigung von Kreditinstituten und Wertpapierfirmen und zur Anpassung des Aufsichtsrechts an die Verordnung (EU) Nr. 575/2013 über Aufsichtsanforderungen an Kreditinstitute und Wertpapierfirmen – CRD IVUmsetzungsgesetz) of 28 August 2013, Federal Law Gazette I p. 3395, and the ” Act Amending Laws Relating to the Financial Market” (Gesetz zur Anpassung von Gesetzen auf dem Gebiet des Finanzmarktes – FinMarktAnpG) of 15 July 2014, Federal Law Gazette I p. 934. Moreover, the recommendations of the European Banking Authority “EBA Guidelines on Internal Governance” (GL 44) of 27 September 2011 and the “EBA Guidelines on the Assessment of the Suitability of Members of the Management Body and Key Function Holders” of 22 November 2012 have been transposed into German law. The second edition of this Guidance Notice outlines the professional and personal requirements for persons appointed as management board members under the relevant supervisory legislation. It provides an overview of the associated notification obligations, including the documents which must be submitted. It considers in detail the expanded requirements for management board members resulting from the changes to the Banking Act.

The credit institutions which are members of a cooperative auditing association (genossenschaftlicher Prüfungsverband) or which are audited by the auditing body of a savings bank and giro association (Sparkassen- und Giroverband) are to send the notification and any documents to be appended via their association, together with an extra copy intended for that association. The role of the associations must be observed in Germany.

Since 4 November 2014, the European Central Bank (ECB) has served as the supervisory authority for significant German credit institutions within the scope of the Single Supervisory Mechanism (SSM). The ECB supervises these significant institutions on the basis of national supervisory legislation, except where European law is directly applicable. Significant institutions submit notifications concerning the appointment and resignation of management board members – including all of the documents to be appended – to BaFin and the Deutsche Bundesbank.

The European Central Bank is responsible for assessing the professional suitability, the reputation and the available time of a management board member and will notify the institution of the result of its assessment directly. This assessment is made on the basis of the provisions of the Banking Act. However, the ECB is not bound by an existing national interpretation or administrative practice.

The European Central Bank, BaFin and the Deutsche Bundesbank shall be notified of other activities of a management board member of a significant institution and of any direct participating interests. The notifications and all documents and declarations to be appended must be submitted in German. The following deviating provisions apply to significant institutions directly by the ECB. Where documents are not issued in German, a certified translation or a translation prepared by a publicly appointed or sworn interpreter or translator will be required in addition to the original version. The relevant BaFin division may waive the translation of English-language documents. Significant institutions directly supervised by the ECB may submit the notification as well as all documents to be appended in either German or in English. The notifications prescribed by the Banking Act, the Payment Services Supervision Act and the Capital Investment Code shall be submitted without delay. As a rule, BaFin will no longer assume that a notification has been submitted without delay if a period of four weeks has been exceeded following the decision made by the relevant body. BaFin may require further documents and information if this appears necessary in an individual case. BaFin will not assume the costs associated with the required documents.

On their websites, BaFin and the Deutsche Bundesbank provide the following forms which are to be used for the individual notifications and for the declarations to be made.

Banking Act

  • Personnel changes relating to management board members,
  • Details of reputation, available time and additional mandates,
    • Declaration concerning criminal proceedings and proceedings for administrative offences, decisions under trade law and insolvency or enforcement proceedings,
    • Declaration concerning familial relationships,
    • Declaration concerning business relationships,
    • Details of additional mandates as a management board member or as a member of administrative and supervisory bodies,
    • Details of available time,
  • Secondary activities of management board members,
  • Participating interests of management board members.

Capital Investment Code

  • Personnel changes relating to management board members,
  • Details of reputation,
    • Declaration concerning criminal proceedings and proceedings for administrative offences, decisions under trade law and insolvency or enforcement proceedings,
    • Declaration concerning familial relationships,
    • Declaration concerning business relationships,
  • Secondary activities of management board members,
  • Participating interests of management board members.

Payment Services Supervision Act

  • Details of reputation,
  • Secondary activities of management board members,
  • Participating interests of management board members,

An intention to make an appointment, its realisation, its withdrawal (Banking Act) or a change of this intention to appoint (Banking Act) a management board member shall be reported without delay. The institution or the KAGB undertaking must submit this notification. Management board members within the meaning of the Banking Act and the Payment Services Supervision Act are those natural persons who are appointed according to law, articles of association, articles of incorporation or a partnership agreement to manage the business of and represent an institution organized in the form of a legal person or a commercial partnership. Management board members within the meaning of the Capital Investment Code are those natural persons who are appointed according to law, articles of association, articles of incorporation or a partnership agreement to manage the business of and represent a capital management company as well as natural persons who actually manage the business of the capital management company without being formally appointed as management board members. This notification obligation also applies for the appointment of an acting management board member to fulfil the function of a management board member if the latter is unable to do so.

In its long-standing administrative practice, BaFin has refrained from forwarding appointment notifications submitted by the relevant association of auditors for credit cooperatives’ board members serving in an honorary capacity. However, notice must be provided of an intention to appoint a part-time management board member. Already the intention to appoint a management board member is subject to notification.

Basic documents

The following documents/declarations have to be appended to the notification:

  • Curriculum vitae,
  • Details of management board members’ reputation,
  • “Certificate of good conduct for presentation to a German authority”, “European certificate of good conduct for presentation to a German authority” or “equivalent documents” from another country,
  • Excerpt from the Central Trade and Industry Register,
  • Details of additional mandates as a management board member and in administrative and supervisory bodies,
  • Details of available time.


By submitting the information and declarations from the management board member which have to be appended to the notification, the notifying institution or the notifying KAGB undertaking confirms that the information submitted is accurate to the best of its knowledge. If the management board member who is to be appointed has been, or is already a management board member or a member of the administrative or supervisory body of an undertaking supervised by BaFin, all of the documents/declarations to be presented in connection with this notification have to be re-submitted. BaFin may waive this requirement in individual cases.

A curriculum vitae has to be appended to the notification of intent. This curriculum vitae must be complete and truthful and must be personally signed and dated. The curriculum vitae shall focus primarily on the positions held during the management board member’s professional career. For these individual positions, the CV has to indicate not only the year, but also the month in which this position began or ended. In the description of positions held, in particular details of this person’s powers of representation, his or her internal decision-making powers and the divisions within the undertaking overseen by him or her shall be provided. Job references for employment positions within the last three years prior to submission of the notification have to be appended to the curriculum vitae, if available. Within the scope of the Capital Investment Code and the Payment Services Supervision Act, job references must only be submitted as required by BaFin. The curriculum vitae has to include the following details:

  • surname, all first names,
  • birth namedate of birth,
  • place of birth,
  • place of residence,
  • nationality,
  • a detailed description of relevant education and training,
  • the names of all undertakings for which the management board member currently works or has previously worked,
  • details of the nature and duration of the relevant activity, including secondary
    activities.

If a management board member has resided outside Germany within the last ten years, the period and country in question must be indicated. If the principal place of residence of the management board member and his or her place of work did not lie within the same country, this also has to be indicated. This information is relevant for BaFin insofar as this affects the register excerpts which must be submitted.

The social credit rating is comprehensively checked: Details of the management board member’s reputation, a “Certificate of good conduct for presentation to a German authority”, “European certificate of good conduct for presentation to a German authority” or “equivalent documents” from another country, excerpt from the Central Trade and Industry Register, details of additional mandates as a management board member or in administrative or supervisory bodies (Banking Act), details of available time (Banking Act). Comprehensive additional regulations must be observed for these points.

30 Registered Credit Rating Agencies in China

Agencies, Certifications, Read, Registrations

The credit rating industry in China has a history of more than 30 years. According to the “Interim Measures for the Administration of the Credit Rating Industry”, which came came into force on December 26, 2019, the People’s Bank of China is the department in charge of the credit rating industry and takes charge of the supervision and administration of credit rating nationwide. The National Development and Reform Commission, the Ministry of Finance and the China Securities Regulatory Commission are the entities in charge of the administration of the credit rating business, which legally supervise and administer the credit rating business within the scope of their duties.

The People’s Bank of China (http://www.pbc.gov.cn/)

The National Development and Reform Commission(https://www.ndrc.gov.cn/

the Ministry of Finance(http://www.mof.gov.cn/

the China Securities Regulatory Commission(http://www.csrc.gov.cn/

Until end of July 2020 there are 30 rating agencies and 133 credit reporting agencies registered by the People’s Bank of China.

List of registered rating agencies in China:

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Recognized Credit Rating Agencies

Agencies, Certifications, Read, Registrations, Regulations

There are almost 200 countries in the world. Many countries do not have specific regulations on rating activities, but most industrialized countries do have laws on Credit Rating Agencies (CRAs). Credit Rating Agencies are required to get registered, licensed, recognized or certified.

Until the Credit Rating Agency Reform Act of 2006 was introduced in the United States, there was no really orderly procedure for recognizing Credit Rating Agencies. However, if ratings are used in law to regulate certain issues, provisions are also required as to which agencies may issue the relevant ratings.

Certain authorities are charged with administering the rules of their countries with respect to the practices of Credit Rating Agencies in determining credit ratings for the protection of users of credit ratings and in the public interest. They are promoting accuracy in credit ratings issued by Credit Rating Agencies. The authorities are working to ensure that credit ratings are not unduly influenced by conflicts of interest and that Credit Rating Agencies provide greater transparency and disclosure to investors.

In support of this mission, competent authorities conduct examinations of Credit Rating Agencies to assess and promote compliance with statutory and other requirements.

  • They monitor the activities of Credit Rating Agencies,
  • conduct outreach with investors, issuers, and other industry participants,
  • develop and administer rules affecting Credit Rating Agencies; and
  • provide guidance generally with respect to the regulatory initiatives related to Credit Rating Agencies.

The competent authorities publish lists of the Credit Rating Agencies that they have recognized or certified. For various reasons, these are not always visible. Have a look at what happened on Monday, July 27, 2020 @ 09:00 – the relevant page of the website of the European Securities and Markets Authority (ESMA) was not accessible to everybody. No matter, which device and which browser you are using, you would not get their information online.

We therefore have lists of the data available to us here. In contrast to the official lists, our ones include links to Credit Rating Agencies’ websites. This makes it easy to get an overview of all recognized agencies and to contact Credit Rating Agencies. Please ask us for updates.

To find the Credit Rating Agencies recognized in the respective jurisdictions, follow the links in this table.

ArgentinaComisión Nacional de Valores (CNV)
AustraliaAustralian Securities and Investments Commission (ASIC)
AustriaEuropean Securities and Markets Authority (ESMA)
BangladeshBangladesh Securities and Exchange Commission (BSEC)
BelgiumEuropean Securities and Markets Authority (ESMA)
Bolivia…more
BrazilComissão de Valores Mobiliários (CVM)
BulgariaEuropean Securities and Markets Authority (ESMA)
CanadaCanadian Securities Administrators
(
CSA/ACVM)
ChinaPeople’s Bank of China (PBoC), National Association of Financial Market Institutional Investors (NAFMII), China Insurance Regulatory Commission (CIRC), National Development and Regulatory Commission (NDRC), China Securities Regulatory Commission (CSRC)
Costa RicaSuperintendencia General de Valores (SUGEVAL)
CroatiaEuropean Securities and Markets Authority (ESMA)
Czech RepublicEuropean Securities and Markets Authority (ESMA)
DenmarkEuropean Securities and Markets Authority (ESMA)
EcuadorSuperintendencia de Compañías, Valores y Seguros (SC)
El Salvador…more
EstoniaEuropean Securities and Markets Authority (ESMA)
FinlandEuropean Securities and Markets Authority (ESMA)
FranceEuropean Securities and Markets Authority (ESMA)
GermanyEuropean Securities and Markets Authority (ESMA)
GreeceEuropean Securities and Markets Authority (ESMA)
Guatemala…more
Honduras…more
HungaryEuropean Securities and Markets Authority (ESMA)
IndiaSecurities and Exchange Board of India (SEBI)
IndonesiaOtoritas Jasa Keuangan (OJK)/Financial Services Authority (FSA) …more
IranSecurities & Exchange Organization of Iran (SEO)
IrelandEuropean Securities and Markets Authority (ESMA)
ItalyEuropean Securities and Markets Authority (ESMA)
JapanFinancial Services Agency
(
FSA)
LatviaEuropean Securities and Markets Authority (ESMA)
LithuaniaEuropean Securities and Markets Authority (ESMA)
LuxembourgEuropean Securities and Markets Authority (ESMA)
MalaysiaSuruhanjaya Sekuriti Securities Commission Malaysia (SC)
MaltaEuropean Securities and Markets Authority (ESMA)
MexicoComisión Nacional Bancaria y de Valores (CNBV)
NetherlandsEuropean Securities and Markets Authority (ESMA)
Nicaragua…more
PakistanSecurities and Exchange Commission of Pakistan (SECP)
Panamá…more
Perú…more
Philippines…more
PolandEuropean Securities and Markets Authority (ESMA)
PortugalEuropean Securities and Markets Authority (ESMA)
Republic of CyprusEuropean Securities and Markets Authority (ESMA)
República Dominicana…more
RomaniaEuropean Securities and Markets Authority (ESMA)
RussiaCentral Bank of the Russian Federation, Bank of Russia (CBR)
Saudi ArabiaCapital Market Authority of Saudi Arabia (CMA)
SingaporeMonetary Authority of Singapore (MAS)
SlovakiaEuropean Securities and Markets Authority (ESMA)
SloveniaEuropean Securities and Markets Authority (ESMA)
South AfricaFinancial Sector Conduct Authority (FSCA)
SpainEuropean Securities and Markets Authority (ESMA)
SwedenEuropean Securities and Markets Authority (ESMA)
SwitzerlandSwiss Financial Market Supervisory Authority FINMA
Taiwan…more
ThailandSecurities and Exchange Commission Thailand (SEC)
TurkeyCapital Markets Board of Turkey (CMB)
UkraineNational Securities and Stock Market Commission (NSSMC)
United States of AmericaU.S. Securities and Exchange Commission Nationally Recognized Statistical Rating Organizations (US SEC NRSRO)
UruguayBanco Central de Uruguay (BCU)

The table refers to the statutory rating requirements mandated by laws and regulations. In practice, however, ratings are often “encouraged”, “advised” and/or “requested by investors”. Please note that this is not an exhaustive list. RATING EVIDENCE has detailed information for a number of other countries. It should also be borne in mind that in some countries the regulation of credit rating agencies is not left to just one authority, but rather that a plurality of authorities within the same jurisdiction recognize credit rating agencies for different purposes according to different standards. Here are some examples:

  • Bond Public Offering,
  • Bond Private Placement,
  • Debt instrument other than bond (Medium Term Notes, Commercial Paper)
  • Bank Loan,
  • Asset Backed Security Issue,
  • Public Issue of Equity Shares,
  • Banks,
  • Non-bank Financial Institution (before IPO),
  • Non-Life & Life Insurance Company,
  • Microfinance Banks (MFBs),
  • Offshore Bond Market/External Commercial Borrowings,
  • Public Deposits of Non-Banking Finance Companies,
  • Security Receipts issued by Asset Reconstruction Companies,
  • Micro & Small Enterprises (MSE),
  • Grading of Maritime Training Institutes,
  • Parallel Marketers of Liquified Petroleum Gas/Superior Kerosene Oil,
  • Energy Services Companies,
  • Renewable Energy Service Companies (RESCOs),
  • System Integrators (SI),
  • Structured Products
  • Modaraba Certificates of Musharaka.

Please see each country’s page for details.

Authorization

Rating Agency Violates Disclosure Of Transparency Reports And More

CRA Transparency Reports 2021 “Transparency Reports” of credit rating agencies (CRAs) are published in accordance with Article 12 and Annex I, Section E.III of the EU Regulation on Credit Rating Agencies: (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies, as amended by Regulation (EU)…

Green Light For Greensill Was Legitimate

A Berlin rating agency remains as a scapegoat Now it is official: In the city of Mohnheim no failure of the administration could be determined before and in the insolvency of Greensill Bank in Bremen. The responsibility is put on the “investment grade” rating, which was issued by a local rating agency in Berlin. In…

The Graveyard of Authorized Credit Rating Agencies in the European Union

Rating agencies have been registered in the European Union since 2010 in order to operate in accordance with the EU regulation on rating agencies of 2009 (CRAR). Dozens of agencies have therefore made use of the option, but also the obligation, to register or get certified. Rating agencies are only allowed to operate in the…

Credit Rating Agency Authorisation 2021

Links to websites of the Credit Rating Agencies authorized in the European Union. The credit rating agencies listed below have been registered or certified by the European Securities and Markets Authority (ESMA) in accordance with the Credit Rating Agencies Regulation. Domains of websites are added. According to ESMA, the list was last updated on May…

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Recognized Credit Rating Agencies in Russia

Agencies, Certifications, Read, Registrations, Regulations

ACRA Analytical Credit Rating Agency

The Russian Government set a minimum credit rating for banks that service federal budget funds (the document is published on the official website of the Russian Federation Ministry of Finance at http://government.ru/docs/28240/).

The federal budget funds may be placed on deposits with bank that have a credit rating of at least A-(RU) under the ACRA’s (Analytical Credit Rating Agency; Russian: Аналитическое Кредитное Рейтинговое Агентство) national rating scale. A-(RU) reflects a moderately high creditworthiness, with some sensitivity to adverse changes in commercial, financial and economic conditions. Moreover, the Federal Treasury has the right to establish stricter credit rating requirements.

ACRA is a rating agency based in Moscow, Russia. It was established in 2015, due to their only relative independence colloquially known as the “Putin Credit Rating Agency”. Due to the withdrawal of US-based rating agencies because of legislative changes and sanctions against Russia, ACRA expects to become Russia’s main ratings issuer. ACRA apparently does not issue ratings to companies outside of Russia.

Expert RA

Expert RA was on the list of credit rating agencies accredited by the Bank of Russia. Being rated by Expert RA is among the official requirements imposed on banks, insurers, pension funds, and issuers. Expert RA ratings are used by Bank of Russia, Ministry of Finance, Ministry of Economic Development, Moscow Exchange and other financial market participants.

National Rating Agency Limited Liability Company (NRA)

National Rating Agency Limited Liability Company (NRA) was in the register of ratings agencies accredited with the Ministry of Finance of the Russian Federation. Ratings were officially recognized by the Central Bank of the Russian Federation, Vnesheconombank, Federal Financial Markets Service, Rusnano, Ministry of Agriculture of the Russian Federation, Agency for Housing Mortgage Lending, RTS and MICEX stock markets, National Association of Stock Market Participants, National Securities Association, National Managers’ League and  Association of Russian Banks. On January 13, 2017 NRA informed the market participants that it will not take any rating actions with respect to credit ratings (including NRA’s Credit Rating, Financial Reliability and Financial Strength Ratings) assigned before the end of the transitional period (before January 13, 2017) until it is entered in the Register of Credit Rating Agencies. NRA continued assigning and updating non-credit ratings, such as the Reliability Rating, the Service Quality Rating, the Corporative Management Quality Rating, the Risk Management Quality Rating, the Employer Attractiveness Rating, and some other. The assignment and update of the said ratings will go on as a normal course of NRA’s business, without any changes. NRA examined the Bank of Russia’s statement of reasons for its decision not to include NRA in the Register of Credit Rating Agencies in order to prepare a new folder of documents and re-apply for registration.

Monetary Authority of Singapore Encourages Ratings By Singapore-dollar Credit Rating Grant

Agencies, Certifications, Read, Registrations, Regulations

The European Commission’s decision to repeal the equivalence status for Singapore Credit Rating Agencies does not impact the operations of Credit Rating Agencies in Singapore. As confirmed by the European Commission, Credit Rating Agencies in Singapore will continue to be able to access the European Union market through the endorsement regime which they currently operate under. Under this regime, ratings issued by Credit Rating Agencies in Singapore are endorsed by their related entities in the European Union, and can continue to be recognised and used for regulatory purposes in the European Union.

There are two existing regimes for Credit Rating Agencies outside of European Union to have their ratings recognised and used for regulatory purposes in the EU, namely certification through the equivalence regime or endorsement. While Singapore’s regulatory regime for CRAs no longer has equivalence status, Singapore continues to be on the list of countries that the European Securities and Markets Authority (ESMA) has deemed as meeting the legal and supervisory framework for the endorsement regime.

Credit Rating Agencies play numerous roles in the financial system of Singapore. For example, direct insurer who apply for a licence need to report about credit raitngs. Since applicants need a licence to carry on life and/or general insurance business in Singapore, they have to meet admission criteria. The Monetary Authority of Singapore assesses applications for direct life and general insurance licences using a number of criteria, among them past and present credit ratings by international rating agencies, including Standard and Poor’s, A.M Best, Moody’s and Fitch.

Since June 30, 2017 the Monetary Authority of Singapore provides a Singapore-dollar Credit Rating Grant to encourage issuers in the Singapore-dollar bond market to issue rated bonds. The Singapore-dollar Credit Rating Grant covers the cost of issuer, programme and issue ratings from Fitch Group, Moody’s, and Standard & Poor (S&P). For each qualifying issuer, the SGD Credit Rating Grant can cover credit rating expenses from multiple issuances subject to the funding cap.

Although investors today generally have access to publicly available information such as company financial statements and offering documents when they consider their bond investments, the Monetary Authority of Singapore believes that greater availability of credit ratings in the domestic bond market will help to further improve market transparency, by providing timely and independent assessments of the credit worthiness of issuers throughout the life of a bond.

Credit ratings can also benefit bond issuers. Many regular issuers in the Singapore-dollar bond market are currently unrated and rely mainly on the same pool of domestic investors. Credit ratings will allow these issuers to attract a broader and more diverse investor base, including international institutional investors. The Singapore-dollar Credit Rating Grant is open to both foreign and domestic issuers.

Securities and Exchange Commission Thailand Approved Credit Rating Agencies

Agencies, Certifications, Read, Registrations, Regulations

The following rating agencies shall be Credit Rating Agencies approved by the Office of the Securities and Exchange Commission of Thailand to issue credit rating for instruments or businesses related to issuance and offer for sale under the Notification of the Capital Market Supervisory Board and instruments. They are required to provide credit ratings under the rules related to investment of mutual funds and private funds.

In the case where the credit rating for instruments or businesses related to issuance and offer for sale under the Notification of the Capital Market Supervisory Board, the domestic Credit Rating Agencies shall assign the credit rating within the a specified scope. Credit rating agency business is excluded from securities business in the category of securities investment advisory. In case credit rating agencies established under a foreign law issue a credit rating for instruments or businesses related to issuance and offer for sale of instruments in the Kingdom of Thailand, such credit rating agencies shall comply with the following requirements:

  • In case of issuing the credit rating to structured finance product, symbols used shall be different from those used in issuing the credit rating to general debt instruments, provided that the symbols’ meanings shall be clearly explained and disclosed to investors;
  • in case of unsolicited rating disclosed in Thai language, the following requirements shall be complied:
    • policy and practice guideline for issuance of the credit rating in such cases shall be clearly specified;
    • in disseminating the credit rating to the public, the following information shall always be correctly and completely disclosed the issuance of the credit rating was not hired by instrument issuer and whether or not the instrument issuer participated in providing of information for the purpose of issuing the credit rating; sources of information used in issuing the credit rating. If any credit rating agency lacks suitability or credibility in undertaking of credit rating business or fails to comply with guideline in undertaking of credit rating business as specified by International Organization of Securities Commissions (IOSCO) or fails to comply with the requirement specified in Thai law.

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Comisión Nacional Bancaria y de Valores Supervised Credit Rating Agencies

Agencies, Certifications, Read, Registrations, Regulations

Comisión Nacional Bancaria y de Valores (CNBV) main function is to inform the market about the real risks that the investing public faces in financial intermediation. Regulation is essential for greater transparency in its actions and less exposure to conflict of interest. The Comisión Nacional Bancaria y de Valores supervises 7 Credit Rating Agencies, called Instituciones Calificadoras de Valores (ICVs) in Mexico, within the framework of the Securities Market Law, the General Corporations Law Mercantile and Provisions on the matter.

In accordance with current regulations, among other information, these institutions must have available on their website the meaning and scope of their qualifications, the codes of conduct that govern their actions, the methodologies and procedures they use for the study, as well such as the analysis of the credit quality of the entities or issuers, and any substantial changes in them must be revealed so that they can be consulted by the investing public.

Comisión Nacional Bancaria y de Valores powers over Credit Rating Agencies:

  • Carry out inspection and surveillance.
  • Make observations and, where appropriate, order the adoption of measures aimed at correcting the irregular facts, acts or omissions that it has detected..
  • Impose sanctions of an administrative nature.
  • Issue provisions that contain minimum requirements that must be included in its Code of Conduct.
  • Determine the means through which Credit Rating Agencies must disclose to the public the ratings they make on securities already registered or to be registered in the National Securities Registry.
  • Issue provisions on the financial, administrative and operational information that rating agencies must submit, as well as their modifications and cancellations.
  • Revoke their authorization when they commit serious or repeated infractions to the provisions of the Securities Market Law; are declared bankrupt, or agree to its dissolution and liquidation, prior agreement of its Governing Board.
  • Authorize their merger or division, with the prior agreement of their Governing Board.
  • Require data, reports, records, minute books, documents, correspondence and other information deemed necessary for supervision.
  • Order the suspension of the rating service when in its judgment there is a conflict of interest between the client and the Credit Rating Agency.
  • Order the suspension of the publicity of the Credit Rating Agencies when in its judgment it implies inaccuracy, lack of clarity, unfair competition, or may lead to error.
  • It is important to mention that the ratings issued by Credit Rating Agencies are an opinion on the credit quality of an entity or issue, and in no way represent a recommendation on the purchase or sale of a certain security.

Although each rating agency has its own rating scale, in general the rating levels granted by the Credit Rating Agencies could be grouped into: AAA, AA, A, BBB, B, CCC, CC, C, D. However, for greater In detail, the Comisión Nacional Bancaria y de Valores recommends to review the scales published on the internet pages of each Credit Rating Agency (see below).

The regulation of these types of entities requires that the information they disclose to the public be updated, relevant, timely, of quality and clear. The information provided by the Credit Rating Agencies allows the investor to have reliable reference information for investment decision making.

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Suruhanjaya Sekuriti Securities Commission Malaysia Committed to Allow ASEAN-Owned Credit Rating Agencies in Malaysia

Agencies, Certifications, Read, Registrations, Regulations

Under the Working Committee on Financial Services Liberalisation, the Association of South-East Asian Nations (ASEAN) completed the Eighth Package of Financial Services Commitments (Eighth Package), which was signed by the Association of South-East Asian Nations Finance Ministers on April 5, 2019. To enhance access into the capital market via the Eighth Package, the Suruhanjaya Sekuriti Securities Commission Malaysia (SC) committed to allow 100% ASEAN-owned credit rating agencies in Malaysia. This offer came into force on October 7, 2019. Among them, are these two Credit Rating Agencies in Malaysia:

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Securities and Exchange Commission of Brazil Recognized Credit Rating Agencies

Agencies, Certifications, Read, Registrations, Regulations

Here are all recognized Credit Rating Agencies with name, address, district, city, state, postal addressing code, direct distance dialing, phone, fax, names of the risk rating director and internal controls director, registration date, Brazil national registry of legal entities number and current situation as of August 6, 2020.

In addition to the credit risk rating agencies registered with the Securities and Exchange Commission of Brazil, there are others, domiciled in third jurisdictions, which are recognized by the Securities and Exchange Commission for proving compliance with the requirements established by article 5 of CVM Instruction No. 521/2012. So far, agencies in this condition are as follows:

  • A.M.Best Rating Services, Inc., headquartered in the United States of America and supervised by the Securities and Exchange Commission (“SEC”).
  • S&P Global Ratings, headquartered in the United States of America and supervised by the Securities and Exchange Commission (“SEC”).

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Australian Securities and Investments Commission Licensed Credit Rating Agencies

Agencies, Certifications, Read, Registrations, Regulations

The Australian Securities and Investments Commission (ASIC) published an information sheet (INFO 143) for credit rating agencies providing services in Australia. It gives guidance on the meaning of certain conditions that apply to these credit rating agencies under their Australian financial services (AFS) licence.

It covers the scope and purpose of Australian Securities and Investments Commission’s guidance, separating advisory services from credit rating services, applying methodologies in a continuous manner, timely disclosure of actual and potential conflicts of interest, periodic review of methodologies and models, and review of and disclosure about affected ratings after material changes. The conditions covered by Australian Securities and Investments Commission’s information sheet reflect certain provisions of the International Organization of Securities Commissions (IOSCO) Code of Conduct Fundamentals for Credit Rating Agencies (IOSCO Code), which credit rating agencies must adopt with specified modifications under their Australian financial services licence.

The guidance is provided in the context of the assessment by the European Securities and Markets Authority (ESMA) as mandated by the European Commission of whether Australia’s regulation and supervision of credit rating agencies is equivalent to the European Union’s Regulation on Credit Rating Agencies (EU Regulation).

Under the EU Regulation, regulation and supervision of credit rating agencies in Australia that is at least as stringent as that in the European Union is necessary for ratings prepared in Australia to be endorsed for use in the European Union. Regulation and supervision of credit rating agencies in Australia needs to be considered equivalent in order for ratings prepared in Australia by a credit rating agency without any legal presence in the European Union to use those ratings in the European Union

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Financial Sector Conduct Authority Registered Credit Rating Agencies in South Africa

Agencies, Certifications, Read, Registrations, Regulations

The Credit Rating Agencies listed below have been registered in accordance with Section 5(1) of the Credit Rating Services Act, 24 of 2012 in South Africa. The list is published by the Financial Sector Conduct Authority in accordance with section 5(10) of the Credit Rating Services Act and is updated within five working days of adoption of a registration decision.

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Canadian Securities Administrators Designated Rating Organizations

Agencies, Certifications, Read, Registrations, Regulations

The Canadian Securities Administrators identified Designated Rating Organizations, and imposed requirements on credit rating organizations wishing to have their credit ratings eligible for use in securities legislation. The rule of the Canadian securities regulators establishes a regulatory framework for the oversight of credit rating organizations by requiring them to apply to become a “Designated Rating Organization” and adhere to rules concerning conflicts of interest, governance, conduct, a compliance function and required filings.

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Comisión Nacional de Valores República Argentina Registered Credit Rating entities

Agencies, Certifications, Read, Registrations, Regulations

Credit Rating Agencies are those entities that are dedicated to making risk ratings. In Argentina, entities must be registered with the Comisión Nacional de Valores in order to carry out the activity and they can be private companies or public universities.

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Public Universities

Unidad CEPAF – Agente de Calificación de Riescos Universidad Pública (UBA)

Universidad Nacional de San Martin

Universidad Nacional de Tres de Febrero

Universidad Nacional del Centro de la Provincia de Buenos Aires

Securities and Exchange Commission of Pakistan Registered Credit Rating Companies

Agencies, Certifications, Read, Registrations, Regulations

An application for permission to form a credit rating company by persons meeting the eligibility criteria accorind to the Credit Rating Company Regulations shall be made to the Securities and Exchange Commission of Pakistan along with a number of documents. The Securities and Exchange Commission of Pakistan on being satisfied that the person seeking permission to form a Credit Rating Company has fulfilled the criteria in terms of the regulations may permit by an order in writing to establish a credit rating company.

The permission granted by the Securities and Exchange Commission of Pakistan to form a Credit Rating Company shall be valid for a period of six months unless extended for a maximum period of further three months under special circumstance, on the application of the promoters made before the expiry of initial six months.

The Securities and Exchange Commission of Pakistan may after making necessary inquiries and after obtaining such further information, as it may consider necessary, and if it is satisfied that each of its promoters or sponsors, directors, chief executive and chairman of the board of directors fulfill the terms and conditions mentioned in the Fit and Proper criteria given grant a licence, subject to compliance with the conditions of the grant of licence as specified in the regulation of Credit Rating Companies.

For renewal of its licence, the Credit Rating Company shall, one month prior to the date of expiry of its licence, apply to the Commission. The Securities and Exchange Commission of Pakistan if satisfied that the applicant continues to meet the requirements for licensing and is eligible for renewal of licence shall renew the licence for one year and issue a certificate of renewal of licence to the Credit Rating Company.

The detailed procedure for grant /renewal of licence and Annexures and Forms as mentioned above may be seen in Credit Rating Companies Regulations, 2016.

The following Credit Rating Agencies were registered according to the Credit Rating Companies Regulations, 2016:

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Securities and Exchange Board of India Registered Credit Rating Agencies

Certifications, Read, Registrations, Regulations

A credit rating agency whose application for grant of a certificate of permanent registration has been refused by the Securities and Exchange Board of India shall cease to undertake any credit rating activity.

Here is a list of registered Credit Rating Agencies in India as of August 3, 2020:

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Finma Authorized Credit Rating Agencies

Agencies, Certifications, Read, Registrations, Regulations

The Swiss Financial Market Supervisory Authority FINMA supervises financial institutions making use of the services of Credit Rating Agencies, e.g. for the capital-adequacy calculations carried out by banks. Supervised institutions can use ratings to meet a number of regulatory requirements. In certain specific cases, only ratings from agencies recognised by FINMA may be used. The requirements for recognition are set out in FINMA Circular 2012/1 “Rating agencies”. They are designed to ensure that the quality of ratings used for regulatory reporting meets certain minimum standards. FINMA recognized the following Credit Rating Agencies. Please note that recognition can be limited to certain types of ratings.

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Financial Services Agency of Japan Authorized Credit Rating Agencies

Agencies, Certifications, Read, Registrations, Regulations

The purpose of supervising Credit Rating Agencies in Japan is, in view of specific problems in their governance, to ensure the appropriate business operations of Credit Rating Agencies in Japan, and to bring about the appropriate exercise of their functions.

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Capital Markets Authority of Saudi Arabia Authorized Credit Rating Agencies

Agencies, Certifications, Read, Registrations, Regulations

​As in many other countries, the work of Credit Rating Agencies has been regulated in the Kingdom of Saudi Arabia, since ratings are referenced in various ways in the financial system. It is therefore necessary to determine which Credit Rating Agencies give the relevant ratings. On November 10, 2014, the Capital Market Authority of Saudi Arabia issued the Credit Rating Agencies Regulations, coming into effect September 1st 2015. The Capital Market Authority of Saudi Arabia announced on September 16, 2015 that it received applications from six companies to be authorized to carry out credit rating activities in the Kingdom of Saudi Arabia.

Six companies applied at that time to be licensed to conduct credit rating activities in the Kingdom under the new regulations:

  • Saudi Credit Bureau ((SIMAH),
  • Standard & Poor’s Credit Market Services Europe Limited,
  • Moody’s Investors Services Middle East Limited,
  • Fitch Ratings,
  • The Islamic International Rating Agency; and
  • A.M. Best Europe- Rating Services Ltd.

The Credit Rating Agencies Regulations has been implemented to regulate and monitor the conduct of Credit Rating Agency activities in the Kingdom of Saudi Arabia, and to specify the procedures and conditions to be met prior to obtaining authorization to conduct such activities.

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Authorization of Credit Rating Agencies

ESG Ratings: The Good, the Bad, the Ugly

Headline ratings no longer enough Prof. Dr. Nils Stieglitz gave a welcome address to the conference “ESG Ratings: The Good, the Bad, the Ugly” of the Corporate Governance Institute (Prof. Dr. Julia Redenius-Hövermann) at the Frankfurt School of Finance & Management, followed by Prof. Dr. Zacharias Sautner, showing data of Hartzmark and Sussman, 2019, proving…

Rating Agency Accused of Using Original, Then Rewritten Data

Refinitiv ESG’s rewriting not a one-time event Prof. Dr. Kornelia Fabisik, Assistant Professor of Finance, Frankfurt School, reports on some discoveries at one of the ESG rating agencies at the conference “ESG Ratings: The Good, the Bad, the Ugly” of the Corporate Governance Institute (Prof. Dr. Julia Redenius-Hövermann) at the Frankfurt School of Finance &…

ACRA partners with EDB and Armenia

Challenge of maintaining independence The Analytical Credit Rating Agency, Eurasian Development Bank (EDB), and the Ministry of Finance of the Republic of Armenia have entered into a Memorandum of Understanding that establishes areas for cooperation between the aforementioned parties, the key goal of which is to stimulate economic growth in the Republic of Armenia and…

Billion Dollar Brand Name Given Away

Rework requested Just a few years ago, a cereal was linguistically associated with Kellogg’s. Anyone who spoke of Kellogg’s in Germany thought of cornflakes and vice versa, anyone who thought of cornflakes would also think of Kellogg’s. In the meantime, discount chains – from Germany for example – such as Aldi and Lidl have revolutionized…

Standard & Poor’s. But “S&P Global Ratings”, Who?

Standard & Poor’s gave away a strong name “Landor announced that it has provided brand strategy and design services to McGraw Hill Financial for the company’s bold new brand identity as S&P Global. Landor partnered with the company to create a new name and design system that confidently marks S&P Global as the leader in delivering…

Moody’s Work With Revenue Grid

Revenue Grid, a Mountainview, California-based revenue platform, raised $20 million in Series A funding. “800,000 sales pros use Revenue Grid to win faster and with more confidence”, says the website. The company is proud to have Moody’s as a customer. W3 Capital led the round and was joined by investors including ICU Ventures. W3 Capital is a family owned…

U.S. SEC NRSRO

Agencies, Certifications, Compliances, Read, Registrations, Regulations

The Office of Credit Ratings (OCR) assists the U.S. Securities and Exchange Commission (US SEC) in executing its responsibility for protecting investors, promoting capital formation, and maintaining fair, orderly, and efficient markets through the oversight of Credit Rating Agencies registered with the Commission as Nationally Recognized Statistical Rating Organizations (NRSROs). In support of this mission, the Office of Credit Ratings monitors the activities and conducts examinations of registered Nationally Recognized Statistical Rating Organizations to assess and promote compliance with statutory and Commission requirements.

The Office of Credit Ratings is charged with administering the rules of the US SEC with respect to the practices of Nationally Recognized Statistical Rating Organizations in determining credit ratings for the protection of users of credit ratings and in the public interest; promoting accuracy in credit ratings issued by Nationally Recognized Statistical Rating Organizations; and working to ensure that credit ratings are not unduly influenced by conflicts of interest and that Nationally Recognized Statistical Rating Organizations provide greater transparency and disclosure to investors.

Klick on the names of the following Credit Rating Agencies currently registered as Nationally Recognized Statistical Rating Organizations to visit their websites:

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ESMA Authorized Credit Rating Agencies

Agencies, Certifications, Read, Registrations

In the period leading up to the financial crisis in 2008, 2010 and so on, the European Commission considered to strengthen the regulatory and supervisory framework for Credit Rating Agencies (CRAs) in the European Union (EU), to restore market confidence and increase investor protection:

  • (1) The first set of rules, which entered into force at the end of 2009, established a regulatory framework for Credit Rating Agencies and introduced a regulatory oversight regime, whereby Credit Rating Agencies had to be registered and were supervised by national competent authorities. In addition, Credit Rating Agencies were required to avoid conflicts of interest, and to have sound rating methodologies and transparent rating activities.
  • (2) In 2011, these rules were amended to take into account the creation of the European Securities and Markets Authority (ESMA), which supervised Credit Rating Agencies registered in the European Union.
  • (3) A further amendment was made in 2013 to reinforce the rules and address weaknesses related to sovereign debt credit ratings.

The competent authorities publish lists of the Credit Rating Agencies that they have recognized or certified. For various reasons, these are not always visible, such as on Monday, July 27, 2020 @ 09:00 – the relevant page of the website of the European Securities and Markets Authority was not accessible to everybody. No matter, which device and which browser you are using, you would not get their information online. We therefore have lists of the data available to us here. In contrast to the official lists, our ones include links to Credit Rating Agencies’ websites. This makes it easy to get an overview of all recognized agencies and to contact Credit Rating Agencies. Please ask us for updates.

Our list is based on the publication of the European Securities and Markets Authority on June 18, 2020. The European Securities and Markets Authority’s last update of this list was on November 14, 2019.

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Credit Analyst

Advisors, Analysts, Associations, Books, Certifications, Experts, Regulations

Oliver Everling, Jens Leker and Stefan Bielmeier (editors): Credit Analyst, De Gruyter Oldenburg, Walter de Gruyter GmbH, Berlin / Boston, http://www.degruyter.com/, updated and completely revised edition, 3rd edition 2015, 390 pages, ISBN 978-3-11-035379-2.

The escalation of the financial crisis has brought changes in hardly any other area as quickly as in the credit analysis. Basel’s banking regulatory requirements set new framework conditions for banks’ lending business after the financial crisis. At the same time, a variety of credit products have become increasingly important on the capital markets, from corporate bonds to securitisations. The credit and capital markets are growing ever closer together in the globalization process. Credit risks must be analyzed and managed – in banks as well as on the capital market, with both institutional and private investors. More professionalism protects market participants from the consequences of credit crises.

The postgraduate program CCrA® offers a comprehensive and practice-oriented qualification for banking and capital market credit experts.

The topics range from instruments for the analysis of individual risks to methods of active credit portfolio management. Important topics in the areas of banking regulation and credit research are also covered. In addition, the established rating agency Standard & Poor’s will give a hands-on insight into how they work in a workshop for Classic participants. Practical case studies and eSeminars complete the program. The compact program structure is designed for in-service participation and enables efficient qualification in just five months. Graduates hold the title CCrA® – Certified Credit Analyst.

Oliver Everling, Jens Leker und Stefan Bielmeier (Herausgeber): Credit Analyst, De Gruyter Oldenbourg, Walter de Gruyter GmbH, Berlin/Boston, http://www.degruyter.com/, aktualisierte und vollständig überarbeitete Ausgabe, 3. Auflage 2015, 390 Seiten, ISBN 978-3-11-035379-2.

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