Cad text horrifies credit agencies

LONDON - Industry associations and rating agencies are concerned about the regulatory risk implications of new regulations on credit rating agencies inserted into the latest draft of the EU Cad, published in early July.

Debate has raged for months in Europe among regulators, credit agencies and rated companies about the appropriate way for credit rating agencies to be officially recognised. Credit ratings will be used under the TSA of the credit risk capital charge portion of Basel II’s pillar I. They are also expected to form a benchmark by which many domestic regulators will perhaps judge the internal systems of the banks they inspect that are applying the IRB approaches.

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