Understanding the Banque de France rating and manager indicator

What is the Banque de France rating?

The Banque de France rating is an assessment assigned by the Bank of a company’s ability to meet its financial commitments over a one to three-year horizon. The Banque de France rating system is recognised by the European Central Bank and the European Banking Authority.

The rating is assigned by the Banque de France’s financial analysts on the basis of common methodological rules. It draws on quantitative and qualitative information gathered from the company itself, and from registries of commercial courts, banks, players involved in business financing and the national statistics office INSEE:

• descriptive data about the company, its activity, its capital and, where relevant, any court rulings, etc.
• accounting information such as the company’s balance sheet and profit and loss account, financial commitments and any payment incidents
• market developments, the company’s positioning on this market, etc.

The Banque de France rating is made up of:

• a turnover rating represented by a letter that indicates the company’s level of activity (corresponding in most cases to its turnover)
• a credit rating represented by a figure that positions the company on a scale of credit risk

Ratings are updated once a year and systematically communicated to company managers. They are entered into the FIBEN companies database.

What is the Banque de France rating used for?

For company directors the Banque de France rating facilitates your dialogue with lending institutions. It provides a common frame of reference that complies with international standards and is widely recognised as being objective and independent:

• It gives lenders information about the quality of the commitments that they are about to make or have already made.
• It helps directors to identify the factors that will impact their company’s financial situation, particularly with respect to credit risk. It provides an external perspective on this situation and on the company’s ability to repay its debts.

In terms of monetary policy, the Banque de France company rating is used to select the claims that banks can pledge as collateral in Eurosystem refinancing operations. The Eurosystem only accepts claims on companies with the highest credit ratings.

In terms of banking supervision, the rating can help banks to calculate their capital requirements in accordance with the Eurosystem’s solvency rules. It also allows the supervisory authorities to assess the quality of banks’ claims portfolios and therefore their exposure to risk.

Which companies are assigned a rating by the Banque de France?

A rating is assigned to all non-financial industrial and commercial companies that have their head office in France or its overseas departments and collectivities.

There are two distinct rating regimes.

• For companies with turnover above €0.75 million, the company’s accounting records are required. We refer to this as an “expert’s appraisal” rating as it is determined not only on the basis of statistical tools, but also by taking account of qualitative and projected elements provided by the company manager to the analyst. Each year, this type of rating is assigned to over 300,000 companies, including nearly 4,000 groups rated on the basis of their consolidated accounts.
• For companies with turnover below €0.75 million, the rating reflects information gathered from commercial court registries and the Centrale des Incidents de Paiements sur Effets (CIPE – National Database of Trade Bill Payment Incidents).

Who has access to the Banque de France rating and how?

Your company’s rating is confidential and is governed by the French Monetary and Financial Code, which strictly defines its potential recipients (Article L. 144-1).

As the legal representative of the rated company, it is communicated to you systematically and free of charge. If you are the legal representative of a legal entity and/or a sole trader, you can obtain this information from the Banque de France’s regional offices and request a personal meeting to receive an explanation of the assigned rating.

Players involved in the financing of the economy can also access the Banque de France rating, by subscribing to FIBEN services. Subscribers may not under any circumstances divulge the information contained in this database outside of their institution.

A number of clients within the Banque de France are also potential recipients of the rating, notably the departments of the Banque de France and the Autorité de Contrôle Prudentiel et de Résolution (ACPR – Prudential Supervision and Resolution Authority) in charge of prudential supervision, combating money laundering and the financing of terrorism, and the tasks assigned to the Banque de France.

What is the manager indicator?

If you hold, or have held, a position as head of company, either as the legal representative of a legal entity, or as a sole trader or a partner of a legal entity, the Banque de France assigns you a manager indicator on the basis of any court rulings your company has potentially been subject to. Banks may take this indicator into account in their decisions to grant business loans.

The possible values for the manager indicator are:

• 000: neutral indicator. This is the value assigned by default when there is no court ruling concerning yourself, your company or a company that you have run.
• 060: significant indicator. This is the value assigned in the event of a judicial liquidation order concerning a company that you have run, or in the event of a court order concerning yourself as an individual.

What is a significant indicator?

The circumstances under which the indicator 060 may be assigned are as follows:

• You hold, or have held, a post of legal representative or sole trader in at least three companies, each of which has been the subject of a judicial liquidation order within the past five years (except where these companies are the subject of a joint ruling or extension of a ruling).
• You as an individual are the subject of one of the following court rulings:
  • personal bankruptcy (duration of the indicator set by the court)
  • a bar on directing, managing, administering or controlling a company (duration of the indicator set by the court)
  • judicial turnaround procedure (duration of the indicator limited to two years if order not extended)
  • judicial liquidation order (duration of the indicator limited to five years if order not extended)

How is the indicator produced?

The manager indicator is produced using freely accessible public data from court offices responsible for commercial cases, by means of an objective and transparent system of assessment. It is devoid of any value judgement about your managerial abilities, but draws to the attention of players involved in the financing of the economy who subscribe to the FIBEN company database information collected from official sources.

Who has access to your indicator?

The manager indicator is communicated to you when it is different from 000, or when it returns to 000. It can also be accessed by FIBEN subscribers, in accordance with procedures set out in article D. 144-12 of the Monetary and Financial Code.

FIBEN subscribers are free to take account of your manager indicator when processing applications for credit for business purposes. They may wish to have a discussion with you in order to understand your situation. However, taking account of data disseminated in FIBEN when processing applications for credit for private purposes is prohibited.

What is segmentation?

The Banque de France’s segmentation of companies is based on an analysis of defaults on trade bills. It contributes to a better understanding of small businesses.

Which companies are covered by segmentation?

Companies of a civil or commercial nature, excluding sole traders and financial companies, are eligible for segmentation if they meet the following criteria:

• the company’s head office is located in metropolitan France or France’s overseas departments
• its turnover is below €0.75 million (and its Banque de France turnover rating is therefore J, K, L, M or X)
• no unfavourable information (court ruling, significant event, etc.) has been recorded with respect to it, so it has a neutral credit rating (0)

How is the segmentation constructed?

The segmentation of companies results from statistical processing based on analysis of objective qualitative and quantitative data. Three variables are used to calculate it:

• a “descriptive” variable which aggregates the company’s date of creation, legal category and sector of activity. Length of existence has a favourable impact on this variable
• a “bank debt” variable derived from the monthly data collection carried out by the Banque de France: share of short-term loans and of trade receivables
• a “defaults on trade bills” variable, collected by the Banque de France via the Centrale des incidents de paiements sur effets (CIPE – National Database of Trade Bill Payment Incidents)

How is the segmentation structured?

The segmentation can take different values ranging from 1 to 6: 1 indicates the most positive statistical elements, 6 the least positive.

Further information