The German Federal Financial Supervisory Authority (BaFin) has announced the first approved registration of a credit rating agency in Europe since changes to laws governing the organisations.
In accordance with new EU rules stating that agencies must register and report to national regulators in order to perform EU-wide credit rating activities, BaFin announced the Euler Hermes Rating GmbH agency as the first agency to gain authorisation.
The agency, created in 2001, offers credit analysis alongside an assessment of companies’ future solvency ratings.
Regulatory supervision is considered necessary to ensure that conflicts of interest from uses of an agency are prevented or minimised, meaning they cannot simultaneously provide consulting and rating services for a company.
In future, rating agencies must regularly provide a supervisory authority with information on their working methodologies, models and ownership structure.
Because of these new requirements, existing ratings agencies were obliged to apply for registration between 7 June and 7 September 2010, to allow them to continue issuing credit ratings in the European Union.
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