Basel II: External Credit Assessment Institutions and Unsolicited Ratings
The Guernsey, Isle of Man and Jersey Commissions have had concerns expressed to them regarding their decision not to recognise unsolicited ratings from approved rating agencies. After due consideration of representations made by one rating agency the Commissions have concluded they will permit banks to utilise unsolicited ratings by any of the three recognised ECAIs (namely Fitch Ratings; Moody’s Investors Service and Standard & Poor’s Ratings Services). However, the Commissions may indicate that individual unsolicited ratings are not to be used if those assessments are considered to be inferior in quality to the general quality of solicited assessments or if it considers that an ECAI’s strategy in relation to the issuing of unsolicited assessments is founded in the placing of pressure on the rated entity to pay for a rating.
Consequent revisions have been made to the following publications:
National Discretions for the Standardised Approaches to Credit and Operational Risk under the Basel II Capital Framework
A notice issued by the three Commissions confirming this decision is available here.
CHRISTOPHER LE MARCHANT
Deputy Director of Banking