ESA Joint Board of Appeal rules on Swedish shadow rating cases

On 13 March 2019 the Joint Board of Appeal of the European Supervisory Authorities ( ESA’s; ESMA, EIOPA and EBA) published its decision in the Nordic banks’ appeals from the decisions of the Board of Supervisors of ESMA in the “shadow ratings” cases

The appeals were brought by four Swedish banks, Svenska Handelsbanken AB, Skandinaviska Enskilda Banken AB, Swedbank AB, and Nordea Bank Abp, from decisions of the Board of Supervisors of ESMA.

The ESMA Board of Supervisors found that the Credit Rating Agencies Regulation (CRAR) had been negligently infringed by the banks by including “shadow ratings” in their credit research reports. It adopted supervisory measures in the form of public notices and fines of EUR 495,000 on each bank.

Skandinaviska Enskilda Banken AB applied to suspend the decision of the ESMA Board of Supervisors as far as it applied to it, but the Board of Appeal refused that application by its Decision of 30 November 2018.

In deciding the appeals, and in summary, the Board of Appeal upheld the decision of the ESMA’s Board of Supervisors on the central question, which was whether the banks’ credit research reports fell within CRAR, but held that the banks (which had voluntarily desisted during the course of ESMA’s investigation) had not acted negligently.

Vide the joint press release: