62. Institutions should have clear policies specifying the conditions under which the rating of a …

Institutions should have clear policies specifying the conditions under which the rating of a third party who has a contractual or organisational relation with an obligor of the institution may be taken into account in the assessment of risk of the considered obligor. Such policies should take into account the following possible manners in which the rating of such a third party may be taken into account in the assessment of risk of the considered obligor:

• (a) the rating of such third party being transferred to a relevant obligor (‘rating transfer’), where there is no difference in risk between the obligor and the related party because of the existence of an appropriate guarantee and the rating of a third party is assigned internally in accordance with the rating system for which the institution has received permission in accordance with Article 143(2) of Regulation (EU) No 575/2013;
• (b) the rating of a such third party being taken into account as an indication for an override of the assignment of the relevant obligor to a grade or pool;
• (c) the rating of such a third party serving as an input to the PD model, reflecting contractual support of the related party for the obligor.

1. Overview

1.1 References

• Article 143 2.

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

• EBA - Published by the European Banking Authority at https://www.eba.europa.eu/