Today, we published a Request for Comment in which we propose a number of updates to our Banks ratings methodology. Under the proposal, we would maintain our overall methodological approach with changes that reflect the evolution of bank credit risk and regulation, and insights we have gleaned from adverse credit events, alongside our forward looking-view of evolving risks.
Our most substantive proposals focus on revisions to certain scorecard ratios that inform our assessment of a bank’s Financial Profile, one of the three sub-components of the Baseline Credit Assessment (BCA). In particular, we propose to recalibrate how we arrive at the Capital sub-factor score within the Solvency factor to incorporate a more consistent approach to leverage, and to replace the Funding Structure and Liquid Resources sub-factor ratios within the Liquidity factor to provide a more nuanced approach to assessing funding risks and the most effective mitigants.
The proposed revisions would also enhance the adjustments we may make to sub-factor scores, including those for interest rate risk, credit concentration, and the degree of balance sheet growth. Our updated approach would also provide greater clarity on how we apply Qualitative Adjustments notching for outsized risks that we might not otherwise capture in the Financial Profile, and it would reflect our view that business models and risk appetite tend to be among the key causes of bank failures. Other proposals include changes to the Macro Profile, instrument notching and our approach to stress testing.
We invite you to join our webinar, which we will be hosting on 7 May, where we will discuss the proposed changes. This session will provide you an opportunity to gain a comprehensive understanding of the proposed changes.
In this Request for Comment, we are seeking feedback on our proposed revisions to the Banks rating methodology. Your formal comments on our proposal are very important to us. We ask you to submit comments on the Request for Comment page at https://ratings.moodys.com by 16 June.
APAC/ EMEA Edition:
Thursday, 8 May | 15:00 HKT | 16:00 JST | 08:00 BST | Register here »
Speakers
Bernhard Held
Vice President - Senior Credit Officer, Financial Institutions
Moody's Ratings
Laura Barrientos
Vice President - Senior Credit Officer / MDG, Credit Strategy & Standards
Moody's Ratings
Simon Ainsworth
Associate Managing Director, Financial Institutions
Moody's Ratings
Megan Fox
Associate Managing Director, Financial Institutions
Moody's Ratings
Lynn Merhi
Analyst, Financial Institutions
Moody's Ratings
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Bernhard is lead analyst for a number of banks in Germany and Austria.
Prior to joining Moody’s in 2014, he worked for Allianz SE as a Financial Analyst with firm-wide credit portfolio responsibilities. Prior to that, he was a Credit Risk Officer at EADS (now Airbus) and a Senior Risk Manager / Senior Analyst in Corporate and Structured Finance at LBBW in Germany and Luxembourg.
Bernhard is a CFA charter holder and has obtained the PRM designation. He holds a Master’s Degree in European Business Studies & Management from Otto-Friedrich University at Bamberg (Germany) and speaks German, English, Spanish and French.
Laura Barrientos is a Vice President – Senior Credit Officer in the Methodology Development Group (MDG) at Moody’s Ratings. During her seven years in MDG, Laura has led a variety of methodology development projects, including the Request for Comment on Moody’s approach to rating banks published in April 2025.
Previously, she was a lead analyst covering project finance and infrastructure, and regional and local governments, among other sectors.
Prior roles include working as a senior consultant at the US Department of the Treasury, Office of Technical Assistance.
Laura holds a Bachelor’s degree in Psychology and a Master’s degree in Public Affairs from the University of Texas at Austin.
Simon Ainsworth, who is based in London, is an Associate Managing Director responsible for the analytical teams maintaining ratings on Nordic and Baltic banks and on a range of European insurance companies.
Simon previously served as a Group Credit Officer. In that role he carried responsibility for monitoring ratings quality as well as assisting in the development and implementation of rating methodologies and practices applied to rated financial institutions within the EMEA region.
Simon joined Moody’s in March 2014 following sixteen years at the Bank of England.
At the Bank, he worked in a variety of roles primarily in its financial markets and banking operation divisions; as well as working on a variety of financial risk and crisis related issues. This included the resolution of failed banks, as well as responsibility for the risk management framework applied to collateral accepted in the Bank’s sterling market operations.Simon graduated from the University of Durham in 1998, having studied Economics and Politics. He is based in London.
Megan Fox is an Associate Managing Director in the Financial Institutions Group at Moody’s Ratings. She oversees the North American team responsible for the ratings and research of a portfolio spanning US-based global investment and universal banks, securities firms, asset managers and Canadian banks.
Before leading the team, Megan spent nearly 15 years as a Moody’s Ratings analyst covering a broad range of global investment, universal, US regional and community banks.
Prior to joining Moody’s Ratings, Megan held positions at Freddie Mac, primarily within the Finance department. She holds an honors degree in economics and political science from the University of Delaware.
Lynn Merhi is an Analyst with Moody’s Financial Institutions Group and is based in London, covering a portfolio of Turkish and other emerging market banks. She joined Moody's in 2022.
Prior to joining Moody's, Lynn held positions as a risk analyst at Byblos Bank and Lebanon and Gulf Bank in Lebanon. She holds a degree in Business Administration with an emphasis on Finance from the American University of Beirut, a Masters in International Trade and Business from ESIC and is a certified Financial Risk Manager from the Global Association of Risk Professionals.