(a)

there are adequate procedures and mechanisms in place that ensure a consistent assignment of obligors or facilities to an appropriate rating system;

(b)

there are adequate procedures and mechanisms in place to ensure that each exposure held by the institution is assigned to a grade or pool in accordance with the rating system;

(c)

for exposures to corporates, institutions, central governments and central banks, and for equity exposures where the institution uses the PD/LGD approach set out in Article 155(3) of Regulation (EU) No 575/2013, there are adequate procedures and mechanisms in place to ensure that all exposures to the same obligor are assigned to the same obligor grade, including exposures along different lines of business, departments, geographical locations, legal entities within the group and IT systems, and to ensure the correct application of the exemption from the requirement to have an obligor rating scale which reflects exclusively quantification of the risk of obligor default for specialised lending exposures, laid down in Article 170(2) of Regulation (EU) No 575/2013, and of the exemption from the obligation to assign separate exposures to the same obligor to the same obligor grade, laid down in Article 172(1)(e) of that Regulation;

(d)

the definitions and criteria used for the assignment are sufficiently detailed to ensure a common understanding and consistent assignment to grades or pools by all the personnel responsible in all business lines, departments, geographical locations, legal entities within the group, regardless of which IT system is used;

(e)

there are adequate procedures and mechanisms in place to obtain all relevant information about the obligors and the facilities;

(f)

all relevant, currently available and most up-to-date information is taken into account;

(g)

in the case of exposures to corporates, institutions, central governments and central banks, and for equity exposures where an institution uses the PD/LGD approach, both, financial and non-financial information is taken into account;

(h)

where information necessary for the assignment of exposures to grades or pools is missing or is not up-to-date, the institution has set tolerances for defined metrics and adopted rules in order to take account of that fact in an adequate and conservative way;

(i)

financial statements older than 24 months are considered outdated and are treated in a conservative way;

(j)

the assignment to grades or pools is part of the credit approval process, in accordance with Article 19;

(k)

the criteria for assignment to grades or pools are consistent with the institution’s lending standards and policies for handling troubled obligors and facilities.

(a)

there are documented policies setting out the grounds for and the maximum extent of overrides and specifying at what stages of the assignment process the overrides are allowed;

(b)

the overrides are sufficiently justified by reference to the grounds set out in the policies referred to in point (a) and that this justification is documented;

(c)

the institution regularly carries out an analysis of the performance of exposures the rating of which has been overridden, including an analysis of overrides performed by each member of staff applying the overrides, and that the results of this analysis are taken into account in the decision-making process at an appropriate management level;

(d)

the institution collects full information on overrides, including information both before and after the overrides, monitors the number and justifications for overrides on a regular basis, and analyses the effect of overrides on the performance of the model;

(e)

the number and justifications for overrides do not indicate significant weaknesses of the rating model.

(a)

groups of connected clients as defined in Regulation (EU) No 575/2013 are identified;

(b)

information on the ratings and defaults of other relevant entities within the group of connected clients is taken into account in an obligor grade assignment in such a way that the rating grades of each relevant entity in the group reflects the different situation of each relevant entity and its relations with the other relevant entities of the group;

(c)

the cases where the obligors are assigned to a better grade than their parent entities are documented and justified.