As previously communicated, Nordea has since 2015 been subject to an investigation by ESMA of its past practice of including so called “shadow ratings” in its investment research materials.
Nordea’s practice was in line with all other major banks in the Nordic market and was generally considered by Nordic bond issuers and bond investors to have served the market well. In particular, it facilitated for small- and medium sized enterprises to access capital markets funding, without the need to incur substantial costs and work to obtain official credit ratings from credit rating agencies.
However, ESMA considers that it is not permitted to express in investment research material an opinion on credit quality by reference to a scale without being registered as a Credit Rating Agency under the CRA Regulation. Nordea discontinued its shadow ratings in August 2016 , although we disagree with ESMA on the basis that investment research materials are explicitly exempted under Article 3(2) of the CRA Regulation. As for today’s fine Nordea has just received the information and will decide whether to appeal after having analyzed the information.
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