Landmark Ruling Strengthens Rating Agencies’ Role in Assessing Bank Creditworthiness

The recent judgment by the Federal Court of Justice (Bundesgerichtshof, BGH) in the case surrounding Greensill Bank underscores the significance of rating agencies in assessing a bank’s creditworthiness. The case, involving a municipality’s lost investment, highlighted the role of financial service providers and affirmed the reliance on ratings from established agencies as primary indicators of a bank’s financial stability, dismissing the relevance of media speculations on the bank’s standing.

Case Background

Conclusion and Future Outlook

The BGH ruling reaffirms the integrity and authority of rating agencies, reinforcing their evaluations as the definitive benchmark for bank creditworthiness. By entrusting ratings over media speculation, the ruling provides financial service providers with a clear operational guideline, focusing on established assessments rather than potentially unverified information circulating in the media. This decision offers significant legal clarity, suggesting that as long as financial advisors use reliable ratings, they meet their obligations, limiting liability even in cases of subsequent bank insolvency.