Criteria for the adoption of delegated decisions on material changes or extensions to rating systems after an investigation
Article 5
1. Decisions granting permission to implement material changes or extensions to rating systems after an investigation shall be taken by means of a delegated decision if all of the following criteria are met: (a) the proposed material change or extension has received a positive assessment from the ECB; (b) the Common Equity Tier 1 capital ratio at consolidated level of the supervised entity, after implementation of the proposed material change or extension to the rating system, does not increase or decrease by more than 20 basis points measured at the level of the range of application of the relevant rating system; (c) the decision does not impose limitations or conditions; (d) where the decision imposes obligations, the supervised entity has agreed in writing to those obligations in advance, and the obligations comply with all of the following: (i) where relevant, the obligations require the supervised entity to improve its rating systems, the use of the IRB Approach, the rating and exposure assignment process, the calculation of risk-weighted exposure amounts and loss exposure amounts, data and documentation, risk quantification, default detection, IT infrastructure or credit risk mitigation techniques in accordance with Part Three, Title II, Chapters 3 and 4, of Regulation (EU) No 575/2013, as required by the relevant regulatory technical standards and interpreted in accordance with the relevant European Banking Authority guidelines and ECB Guides; (ii) where relevant, the obligations require the supervised entity to improve its governance, control or validation activities in accordance with Part Three, Title II, Chapters 3 and 4, of Regulation (EU) No 575/2013, as required by the relevant regulatory technical standards and interpreted in accordance with the relevant European Banking Authority guidelines and ECB Guides; (iii) the obligations set deadlines of a minimum of 3 months and a maximum of 36 months. 2. The criteria set out in paragraph 1 shall also apply where the application package consists both of a material change and a material extension.