Morningstar DBRS Publishes Updated Global Methodology for Rating Banks and Banking Organisations

Morningstar DBRS published an updated version of its "Global Methodology for Rating Banks and Banking Organisations" (the Methodology).

The updated version includes a number of small changes introduced to enhance clarity:
-- Specified that a domestic bank being rated above the local currency credit rating of the sovereign may be more likely if a significant portion of earnings are derived from countries with higher credit ratings.
-- Within the Core Funding Profile section (FL1) in the Funding & Liquidity Building Block, Morningstar DBRS clarified its view of brokered and corporate client deposits, indicating there can be additional pricing and stability risks in a stressed environment depending on the term of the deposits.
-- Updated the second factor in the Capitalisation Building Block under Additional Considerations (C2) to clarify Morningstar DBRS' views on dividend payouts, share repurchases, and asset sales. As a result, this section was also renamed "Flexibility to Raise or Conserve Capital" from "Flexibility to Raise Capital."
-- A sentence was added clarifying that Morningstar DBRS may at times assign credit ratings to a bank subsidiary on a stand-alone basis.

Morningstar DBRS also amended the placement of where the Track Record of Risk Management is assessed, moving it to the Core Risk Profile (R1) from Additional Considerations (R2), also adding language that the forward-looking outlook is the most important component of this assessment.

Morningstar DBRS has conducted a periodic review of the Methodology. Morningstar DBRS deems the update not to be material and determined that no credit ratings are expected to change as a result of this update. This update supersedes the previous version published on 4 June 2024 and is effective as of 23 May 2025.

Notes:
Morningstar DBRS methodologies are publicly available on its website https://dbrs.morningstar.com under Methodologies & Criteria.

For more information on this methodology or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.