On 23 July 2018, the European Securities and Markets Authority (ESMA) published the decisions of the Board of Supervisors (all dated 11 July 2018) to fine five banks for issuing credit ratings without authorisation, in breach of the Credit Rating Agencies Regulation (CRAR). The relevant banks are Danske Bank, Nordea Bank, SEB, Svenska Handelsbanken and Swedbank.
Under the CRAR, in order to issue credit ratings, a firm must be authorised by ESMA. The authorisation ensures that “ratings are independent, objective and of adequate quality and that Credit Rating Agencies are subject to the same rules and oversight across all EU countries”.
ESMA found that the five banks mentioned above issued credit research, including what the banks described as shadow ratings, to their clients between June 2011 and August 2016, and SEB continued to do so until May 2018. ESMA also found that the research provided to clients met the definition of a credit rating under the CRAR, while none of the banks was authorised under the CRAR or in the process of applying for authorisation. Finding the banks in breach of CRAR, ESMA decided that the appropriate supervisory measures in each case were a public notice and a fine of €495,000 to each bank.
In the press release, ESMA notes that the banks have a right to appeal the decisions against them to the Board of Appeal of the European Supervisory Authorities.