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Key changes relating toCredit Rating Agencies

Changes to the ECAI status by January 2014

Key changes due to CRA III from issuer perspective

31 December 2013

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Changes in ECAI status

• CRD IV Package (Capital Requirements Directive and Regulation applicable to financial institutions in the EEA) was adopted in June 2013 and shall enter into force in January 2014

• Key changes relating to External Credit Assessments Institutions (“ECAI”) are introduced:– all registered or certified CRAs to be automatically recognized ECAIs.

The list of registered CRAs is available at ESMA’s website.– The ECAI status will be an EU wide one– Mapping of ratings to the 6 ECAI credit quality steps and to the 7

Solvency II steps should be available by July 2014

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PT8

Number of ECAIs per country until December 2013Source: European Banking Authority

AT4

BE6

BG3

CY3

CZ2

DE7

DK4

EE3

EL4

ES4

FI4

FR7

HU6

IE5

IT4

LT3

LU5

LV3

MT3

NL4

PL3

RO3

SE4

SI3

SK3

UK3

IC3 NO

3

Number of ECAIs recognised across the whole European Economic Area from January 2014 onwards:

25

2345678

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CRA III: key points• The latest amendment of the EU Regulation on Credit Rating

Agencies (“CRA III”) entered into force on June 20th, 2013.

• Key changes from an issuer perspective (for all market segments) are:– in case the issuer wants to mandate 2 CRAs, the issuer should consider

engaging one small CRA (defined as having less than 10% market share). ESMA published on December 16th, 2013 the corresponding list. Except Fitch, Moody’s and S&P, all other CRAs qualify as “small CRAs”

– CRAs shall disclose on their website information about all entities or financial instruments submitted to it for their initial review of for preliminary rating ("Rating-shopping clause")

– Civil liability (Article 35a)

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CRA III: Key changes• for Structured finance issuers only

– Minimum of 2 ratings (otherwise considered unrated)

• For Resecuritisation only: Rotation of CRAs every 4 years, but several exemptions

• Sovereign ratings– Calendar of unsolicited ratings, publication of ratings on Fridays– Review every 6 months

• Other provisions of CRA III shall enter into force only in 2015 (e.g. European Rating Platform; Structured Finance website)

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Appendix: EACRA Members

Registered under the EU Regulation on CRAs (ECAIs from January 2014 onwards):

Registered outside of the European Union

Recognised as ECAI for their credit scoring until December 2013:

Other Members: