Banks have at least six months to continue using U.S. credit ratings for calculating mandatory capital cushions, Reuters quoted European Union regulators as saying on Wednesday. Lenders faced a deadline of June 6 after which they could not use ratings compiled from a non-EU country whose credit rating standards have not been deemed by Europe to be "as stringent" as the bloc's own new rules. Banks using U.S. ratings would have been left without an independent, external credit opinion on some activities like structured finance. They would have been forced to top up regulatory capital with billions of euros to reassure local supervisors, industry officials have said. Brussels has so far held off from endorsing U.S. standards, leaving transatlantic banks in the lurch. On Wednesday the European Securities and Markets Authority (ESMA) issued guidelines to allow the continued use of third-country ratings until the agency has been formally registered in the EU. "If at the point of a credit rating agency's registration, credit ratings issued outside the EU are not considered endorsable ... the use of such credit ratings for regulatory purposes by financial institutions will still be possible for three months from that date," ESMA said in a statement. "ESMA will assess whether the use of such credit ratings can continue for another three month period, in order to avoid the potential for market disruption or financial stability. This would be communicated to the market as soon as the decision is taken," the watchdog added. The deadlock had mainly affected ratings from the United States where the "Big Three" -- Fitch Ratings, Moody's and Standard & Poor's -- are headquartered and where many of the lead rating compilers are based. Fitch declined to comment, while Moody's and S&P were unable to comment immediately. They are all still waiting for their registration applications to be accepted by ESMA, whose spokesman declined to say when this would happen. The watchdog also signalled flexibility when it comes to assessing whether a non-EU country's rules are good enough, saying it will take a "global and holistic view". The EU has already endorsed Japan's rules and ESMA said it was studying improvements anticipated to the U.S. reform of Wall Street known as Dodd-Frank.
