In a significant policy update, the Bank of France has announced a revision to its corporate rating system, marking the first major change in four decades. Beginning January 2025, the turnover threshold for companies to qualify for a rating will increase from EUR 750,000 to EUR 1.25 million.
Objective of the Adjustment
Speaking at a press conference, Émilie Quema, Director of the Entreprises Department, stated that the change aims to align the system with evolving economic conditions and to allocate resources more effectively to larger enterprises.
Details of the Rating System
The Bank of France corporate rating system evaluates a company’s financial capability to meet obligations over one to three years. Unlike private credit rating agencies such as S&P or Moody’s, the bank provides these ratings free of charge.
The ratings rely on data from:
- Official records,
- Tax filings, and
- Financial accounts of companies.
This data is stored in the Fiben database, which assigns:
- A letter indicating the company’s turnover size.
- A numerical score reflecting creditworthiness.
Impact on SMEs
The raised threshold will exclude approximately 7% of companies—predominantly small and medium-sized enterprises (SMEs) with turnovers between EUR 750,000 and EUR 1.25 million—from receiving ratings.
Ratings play a crucial role in business operations as they often influence:
- Trade credit insurance policies.
- Negotiated payment terms.
While this change is intended to focus resources on larger businesses, it may pose challenges for SMEs relying on these ratings to establish financial credibility.
Conclusion
The revised threshold reflects the Bank of France’s effort to modernize its system amidst a changing economic landscape. However, it also raises concerns about the potential impact on smaller businesses that could lose access to a key tool for securing trade and credit advantages.