Interview / Alain Gerbier, Director of Enterprises at the Banque de France: "The new rating scale allows for greater precision".  - Funding & Innovations > Finance function

Interview / Alain Gerbier, Director of Enterprises at the Banque de France: “The new rating scale allows for greater precision”. – Funding & Innovations > Finance function

>At the start of the year, the Banque de France is changing its rating scale. Why ?

The current rating scale has been in use since the 1980s. It had been slightly improved in 2004 but had not changed significantly in 40 years. It had become necessary to review it in depth. Firstly, to harmonize it with those of other central banks and with those of the rating agencies and, on the other hand, to have a more accurate quote and therefore taking better account of the real situation of companies. Because let’s not forget that the objective of this rating is to reflect as best as possible the ability of a company to honor its credit commitments over a period of one to three years. This rating, which is intended for players in the financing of the economy, has several purposes. For monetary policy, it allows banks refinancing themselves with the Central Bank to report, as collateral, loans to solid companies. It also allows banks to assess the quality of their capital. Finally, for managers, it provides them with a precise and objective view of their financial situation. It is established on the basis of an algorithmic processing of the accounting and tax elements that we receive, and systematically coupled with an analysis by experts.

>What exactly changes?

First, we now use a modernized statistical tool that increments many more financial criteriaand over a longer period. However, he remains seated on four axes of analysis identical: earning capacity, financial autonomy, financial structure and liquidity. Next, the credit score scale is now longer. It goes from 1 to 22 notches with 10 levels of eligible ratings against 5 so far. This larger number of rating levels will allow for finer rating.


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>Do you think that in this period of crisis, first with the Covid and now with the probable consequences of the conflict in Ukraine, this new rating scale is more favorable to companies?

It is not a question of being more or less favorable to a company but of reflecting its situation as best as possible. During this Covid crisis, we wanted to smooth the effects, for Ukraine we will try to do the same but the rating must remain plausible, it is important to maintain a reliable thermometer.

On the other hand, it is certain that with 22 notches, when we are forced to downgrade a company by one notch, the downgrade is less painful.

>What advice can you give to CFOs and business leaders?

The 300,000 companies generating more than 750,000 euros in turnover will receive a questionnaire in early April. It is important that they answer them as precisely as possible because this qualitative information enriches the analysis of our experts. And then, throughout the year, do not hesitate to dialogue with the Banque de France, to make an appointment with our departmental branches, to communicate new elements, especially in times of instability as at present. If they disagree with their rating, we are always open to discussion. Especially sincewith this new scale, rating upgrades will be easier because the steps between each notch are less high.


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Last very important piece of advice, and this is something new that we are going to apply in 2022: we are going to be very attentive to payment deadlines. Companies with good cash but which we find have not paid their suppliers within the legal deadlines may be given a discount after an interview. I can therefore only advise financial directors to be very vigilant on this point.

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