RESOLUTION OF BOARD OF NATIONAL BANK OF THE REPUBLIC OF BELARUS

of December 21, 2023 No. 476

About change of resolutions of Board of National Bank of the Republic of Belarus of August 12, 2019 No. 324 and of August 12, 2019 No. 325

Based on paragraphs of the fourth, seventh, eighth, tenth or twelfth Item 12 of the Charter of the National Bank of the Republic of Belarus approved by the Presidential decree of the Republic of Belarus of June 13, 2001 No. 320, of part one of article 39 of the Bank code of the Republic of Belarus Board of National Bank of the Republic of Belarus DECIDES:

1. Make changes to the following resolutions of Board of National Bank of the Republic of Belarus:

1.1. in the resolution of Board of National Bank of the Republic of Belarus of August 12, 2019 No. 324 "About methodology, the reporting and other information of rating agency":

in preamble of the word "sixty sixth, seventieth and seventy fourth" shall be replaced with words "fourth, eighth and twelfth";

To be reworded as follows the instruction about methodology of rating agency, and also the reporting and other information in the field of implementation of rating activities approved by this resolution it (is applied);

1.2. in the resolution of Board of National Bank of the Republic of Belarus of August 12, 2019 No. 325 "About the organization and implementation of rating activities":

in word preamble "the sixty sixth, sixty ninth, seventy second and seventy third" shall be replaced with words "the fourth, the seventh, tenth and eleventh";

exclude Item 2;

To be reworded as follows the regulations on procedure for the organization and implementation of rating activities approved by this resolution it (is applied).

2. This resolution becomes effective since June 1, 2024.

Approved by the Resolution of Board of National Bank of the Republic of Belarus of August 12, 2019 No. 324 (in edition of the Resolution of Board of National Bank of the Republic of Belarus of December 21, 2023 No. 476)

The instruction about methodology of rating agency, and also the reporting and other information in the field of implementation of rating activities

Chapter 1. General provisions

1. This Instruction establishes requirements to methodology of rating agency (further – methodology), procedure for submission to National Bank and approvals with it of methodology, changes of methodology, and also determines procedure and terms of creation and submission to National Bank of the reporting and other information in the field of implementation of rating activities.

2. For the purposes of this Instruction terms are used in the following values:

foreign (international) rating agency – the legal entity created according to the legislation of foreign state and who acquired the right to implementation of rating activities according to the legislation of this state;

the expert – the physical person, including the authorized representative of the legal entity who is not the employee of rating agency is not interested in specific result of rating action having special knowledge and working experience attracted by rating agency to receipt of expert evaluation;

expert evaluation – the opinion of the expert based on special knowledge and working experience.

The terms "affiliated economic society" and "dependent economic society" are used in the values determined respectively by part one of Article 7 and part one of article 8 of the Law of the Republic of Belarus of December 9, 1992 No. 2020-XII "About economic societies".

The term "creditors" is used in the value determined by Item 19 of article 1 of the Law of the Republic of Belarus of December 13, 2022 No. 227-Z "About insolvency settlement".

The terms "accreditation" and "rating agency" are used in the values determined respectively by paragraphs to the second and fourth part one of Item 3 of the Regulations on procedure for carrying out accreditation of rating agencies, including procedure for their inclusion in the register of rating agencies (exception of it) and structure of the data included in the register approved by the resolution of Council of Ministers of the Republic of Belarus and National Bank of the Republic of Belarus of August 12, 2019 No. 530/14.

The term "financial instrument" is used in the value determined by the International accounting standard (IAS) 32 "Financial instruments: representation", the enacted resolution of Council of Ministers of the Republic of Belarus and National Bank of the Republic of Belarus of August 19, 2016 No. 657/20.

The terms "default", "additional services", "client", "credit rating", "methodological committee", "methodology", "monitoring of subject to rating", "motivated appeal", "not requested credit rating", "non-public credit rating", "subject to rating", "response", "departure from methodology", "review", "review of methodology", "confirmation", "press release", "assignment", "forecast", "rating activities", "rating category", "rating action", "rating committee", "sovereign credit rating" and "level of credit rating" are used in the values determined by part one of Item 2 of the Regulations on procedure for the organization and the implementation of rating activities approved by the resolution of Board of National Bank of the Republic of Belarus of August 12, 2019 No. 325.

Chapter 2. Requirements to methodology, procedure for submission to National Bank and approval with it of methodology, changes of methodology. Departure from methodology and its review

3. The rating agency has one or several methodologies necessary for implementation of rating activities.

4. The methodology meets the following requirements:

4.1. contains:

the list of subjects to rating to which the methodology is applied, including instructions on subjects to rating to which this methodology is not applied (if necessary);

the key quantitative and high-quality factors determining solvency of subject to rating, its creditworthness, financial stability, readiness to fulfill the assumed financial liabilities and (or) reliability emitted (issued) it financial instruments;

the factors connected with ecology, climate change and the environment, society, the social sphere and social responsibility, corporate management, exerting impact on solvency of subject to rating, its creditworthness, financial stability, readiness to fulfill the assumed financial liabilities and (or) reliability emitted (issued) it financial instruments;

the description and algorithm of calculations of factors, the specified in paragraphs three and the fourth this subitem;

technique (procedure) of assignment of credit rating, algorithm and procedure for determination of level of credit rating and (or) forecast for it;

rating scale with the description of all rating categories and specifying of all levels of credit rating;

the list of sources of information which is used by rating agency for implementation of rating action according to methodology, and procedure for its obtaining taking into account requirements of the legislation on the commercial, bank and protected by the law other secret, the legislation on personal data;

the bases of review of methodology for the purpose of maintenance of its relevance;

the list of cases in case of which the rating agency refuses assignment of rating and (or) the forecast for it or withdraws the assigned score and (or) the forecast for it;

the list of the terms and their determinations used in methodology;

4.2. provides possibility of comparison of ratings on different types of subjects to rating;

4.3. in case of application of expert evaluation in methodology are specified:

conditions and procedure for involvement of the expert by rating agency for obtaining from it expert evaluation, and also justification of such attraction;

the qualification requirements and requirements to goodwill imposed to the expert (for physical persons) or competences of the legal entity (if the physical person is the authorized representative of the legal entity);

procedure for determination of justification of expert evaluation and its accounting when implementing rating actions according to methodology;

determination of share of expert evaluation or specifying of its borders (on each factor and their set);

the borders of application of the settlement given and value judgment expressed in their percentage to the final level of the assigned credit score.

5. Methodology, changes of methodology affirm at meeting of methodological committee according to requirements of the legislation on rating activities.

The procedure for the organization and functioning of methodological committee is determined by local legal acts of rating agency according to Item 3 of the Regulations on procedure for the organization and implementation of rating activities.

6. The methodology provided to National Bank when carrying out accreditation of rating agency according to subitem 2.1 of Item 2 of Regulations of the ministerial procedure performed concerning subjects of managing according to subitem 14.1.1 "Accreditation of rating agency with inclusion in the register of rating agencies and receipt of the certificate on inclusion in the register of rating agencies" approved by the resolution of Board of National Bank of the Republic of Belarus of April 18, 2022 No. 164, is considered by National Bank on compliance to requirements, to stipulated in Item 4 and part one of Item 5 of this Instruction, and is recognized approved in case of decision making about accreditation of rating agency.

If according to Regulations on procedure for carrying out accreditation of rating agencies, including procedure for their inclusion in the register of rating agencies (exception of it) and structure of the data included in the register, the decision on refusal in accreditation of rating agency is made, the methodology is recognized uncoordinated National Bank.

7. After accreditation the rating agency submits for approval to National Bank each new methodology, changes in each operating methodology within five working days from the date of their approval.

8. In case of submission to National Bank on approval of methodology, change of methodology the rating agency gives access of employees of National Bank to the software created for implementation of the corresponding rating actions on this methodology (in the presence of such software). Acquaintance with the software can be carried out in presentia or with use of video telephone, electronic communication, information networks (systems) or software and hardware and technologies.

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