The banks were sanctioned by the EU authority for issuing credit ratings without having the necessary authorisations to do so.
Danske Bank, Nordea Bank, SEB, Svenska Handelsbanken and Swedbank were fined 495,000 euros each and issued five public notices for negligently breaching the Credit Rating Agencies Regulation (CRAR), ESMA confirmed on its website.
Peter Rostrup-Nielsen, vice director with Danske Bank, said the Danish financial institution accepted the fine.
“We regret that we interpreted the rules incorrectly. It is important for us to ensure that we comply with the relevant rules,” Rostrup-Nielsen said.
Between June 2011 and August 2016, the five banks issued credit research to their clients (SEB continued to do so until May 2018).
This credit research included the issuance of what the banks described as “shadow ratings”, including opinions, deemed to meet the definition of a credit rating provided for by the CRAR, according to the press statement released by ESMA. But none of the five banks had acquired the necessary ESMA authorisation to issue ratings, thereby infringing CRAR authorisation requirements.
The assessments in question were related to assessments of the eligibility of small companies for debentures, and as such were made to meet an important demand, Rostrup-Nielsen told Ritzau.
“We are therefore now working together with others on the market to establish an independent credit assessment bureau, Nordic Credit Rating AS, which will be responsible for the credit ratings in future,” he said.
The size of the fines takes into account the aggravating factor that the banks had committed the infringement for more than six months, but also the mitigating factor that each bank has voluntarily taken measures to prevent similar infringements in future, ESMA stated in its press release.
The five banks have the right to appeal the fines.