Circular no. 263 of 27 December 2006New regulations for the prudential supervision of banks

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Circular's text

External Credit Assessment Institutions

The "New regulations for the prudential supervision of banks" (Circular no. 263 of 27 December 2006) provide for the possibility for banks to determine risk weights for calculating credit risk capital requirements under the standardized method and the IRB method (for securitization positions only) on the basis of credit assessments issued by external credit assessment institutions (ECAI) recognized by the Bank of Italy.

The recognition of such ECAIs and the mapping of ratings to risk weights are based on the criteria provided for in the regulations in use (see Circular no. 263, Title II, Chapter 1, Part 1). Such recognition is by no means aimed at assessing the ECAIs' ratings nor at supporting the chosen methodology - for which aim responsibility falls solely on external credit assessment institutions. In accordance with the above regulations, the Bank of Italy awards the status of recognized ECAI to the following institutions:

  • Fitch Ratings(1) for all exposure classes provided for in the standardized method (Title II, Chapter 1, Part 1), as well as for the securitization positions (Title II, Chapter 2, Part 2). The recognition is awarded only to solicited ratings, with the exception of the "public finance" sector (central governments, central banks, public sector entities, local and regional governments, multilateral development banks) for which unsolicited ratings are recognized as well.
  • Moody's Investors Service Ltd.(1) for all exposure classes provided for in the standardized method (Title II, Chapter 1, Part 1), as well as for the securitization positions (Title II, Chapter 2, Part 2). The recognition is awarded only to solicited ratings, with the exception of the "public finance" sector (central governments, central banks, public sector entities, local and regional governments, multilateral development banks) for which unsolicited ratings are recognized as well.
  • Standard & Poor's Rating Services(1) for all exposure classes provided for in the standardized method (Title II, Chapter 1, Part 1), as well as for the securitization positions (Title II, Chapter 2, Part 2). The recognition is awarded only to solicited ratings, with the exception of the "public finance" sector (central governments, central banks, public sector entities, local and regional governments, multilateral development banks) for which unsolicited ratings are recognized as well.
  • Cerved Group (formerly Lince) for the exposure class "corporates and other entities" provided for in the standardized method (Title II, Chapter 1, Part 1). The recognition is awarded to unsolicited ratings, the only issued by the agency.
  • DBRS Ratings Limited for all exposure classes provided for in the standardized method (Title II, Chapter 1, Part 1), as well as for the securitization positions (Title II, Chapter 2, Part 2). The recognition is awarded only to solicited ratings, with the exception of the "public finance" sector (central governments, central banks, public sector entities, local and regional governments, multilateral development banks) for which unsolicited ratings are recognized as well.

(1) The recognition regards also the controlled companies.