BIPRU 3.3 The use of the credit assessments of ratings agencies

BIPRU 3.3.1R

An external credit assessment may be used to determine the risk weight of an exposure in accordance with BIPRU 3.2.20 R to BIPRU 3.2.26 R only if the ECAI which provides it is recognised by the appropriate regulator as an eligible ECAI for the purposes of the standardised approach to credit risk.

[Note: BCD Article 81(1)]

Recognition of ratings agencies

BIPRU 3.3.2G

The appropriate regulator will recognise an ECAI as an eligible ECAI for the purposes of BIPRU 3, or will refuse to recognise an ECAI or will revoke its recognition of an ECAI as an eligible ECAI in accordance with the Capital Requirements Regulations 2006.

BIPRU 3.3.3G

Regulation 22 of the Capital Requirements Regulations 2006 deals with recognition by the appropriate regulator of eligible ECAIs for exposure risk weight purposes. Regulation 25 deals with revoking recognition.

BIPRU 3.3.4G

The criteria which the appropriate regulator must apply when assessing ECAIs for recognition for exposure risk weighting purposes are set out in Regulation 22 and Schedule 1 to the Capital Requirements Regulations 2006. In making an assessment against those criteria and in carrying out the mapping process described in BIPRU 3.3.7 G to BIPRU 3.3.9 G the appropriate regulator will have regard to the approach set out in the Committee of European Banking Supervisors' "Guidelines on the recognition of External Credit Assessment Institutions" dated 20 January 2006. The appropriate regulator does not expect to recognise an ECAI unless the information set out in those guidelines has been submitted to it.

BIPRU 3.3.5G

The list of eligible ECAIs is published on the appropriate regulator website. When the appropriate regulator recognises an ECAI as an eligible ECAI, it publishes that decision by amending the list of eligible ECAIs on the appropriate regulator website to include the name of the eligible ECAI. When the appropriate regulator determines that the recognition of an ECAI should be revoked, it publishes that decision by deleting the name of the ECAI from the list on the appropriate regulator website

BIPRU 3.3.6G

The list of eligible ECAIs includes those who have been recognised as eligible for exposure risk weighting purposes by a competent authority of another EEA State and are subsequently recognised as eligible ECAIs by the appropriate regulator without carrying out its own evaluation process under Regulation 22(2) of the Capital Requirements Regulations 2006.

Mapping of credit assessments

BIPRU 3.3.7G

Under Regulation 22(3) of the Capital Requirements Regulations 2006 the appropriate regulator is obliged to determine, taking into account the requirements set out in Schedule 2 to the Capital Requirements Regulations 2006, with which of the credit quality steps set out in Part 1 of Annex VI of the Banking Consolidation Directive the relevant credit assessments of an eligible ECAI are to be associated. Those determinations should be objective and consistent.

BIPRU 3.3.8R

The credit quality step with which a relevant credit assessment of an eligible ECAI is to be associated is that in the table mapping the credit assessments of eligible ECAIs to credit quality steps published by the appropriate regulator under Regulation 22(3) of the Capital Requirements Regulations 2006.

BIPRU 3.3.9G

The table mapping the credit assessments of eligible ECAIs to credit quality steps is published on the appropriate regulator's website and amended from time to time in line with additions to and deletions from the list of eligible ECAIs. The table includes mappings made by a competent authority of another EEA State which are subsequently recognised by the appropriate regulator without carrying out its own determination process under Regulation 22(5) of the Capital Requirements Regulations 2006.

[Note: For the most recent version of the table, refer to: http://www.fca.org.uk/your-fca/documents/fsa-ecais-standardised for the FCA and http://www.bankofengland.co.uk/publications/Documents/other/pra/policy/2013/ecaisstandardised.pdf for the PRA]