The Australian Prudential Regulation Authority has published updated guidelines on the recognition of External Credit Assessment Institutions after completing a review of the guidance, which had been temporarily withdrawn in May 2026. The update clarifies how credit rating agencies can obtain recognition so that authorised deposit-taking institutions and insurers can use their ratings in calculating regulatory capital for publicly rated credit exposures, and it now expressly refers to insurers as well as banks. The guidelines set out the routes for direct recognition by APRA and indirect recognition based on recognition by another national supervisor where that supervisor applies sufficiently similar criteria. They also consolidate the eligibility criteria, application requirements, APRA’s process for mapping recognised ratings to prudential risk weights and its ongoing review approach. For directly recognised ECAIs, APRA expects ratings methodologies to remain robust over time and through market changes, requires prompt notification of material methodology or ownership changes, and may withdraw recognition if the criteria are no longer met. The mapping framework continues to rely primarily on three-year cumulative default rates, supplemented by qualitative factors and specific treatment for securitisation assessments.
Australian Prudential Regulation Authority2026-07-09
Australian Prudential Regulation Authority updates ECAI recognition guidelines and clarifies recognition pathways for banks and insurers
The Australian Prudential Regulation Authority has issued updated guidelines on recognition of External Credit Assessment Institutions after a review and temporary withdrawal of the previous version. The changes clarify direct and indirect recognition pathways and explicitly bring insurers, alongside banks, into scope. The guidance also restates APRA’s criteria, ratings mapping approach and ongoing review expectations for recognised ECAIs.