In early 2007, Moody’s revised its bank rating methodology by incorporating Joint Default Analysis (JDA). At its core, the updated methodology considers two important features of a bank’s credit risk: (1) its intrinsic strength, and (2) its ability to obtain financial support from an outside entity should it default.

This page is intended to help you learn more about each step in the rating process. Use the sections and links below to navigate to a topic of interest.

Moody’s BFSR reflects a bank’s intrinsic financial strength relative to all other rated banks globally. These ratings are assigned from a thirteen-point scale ranging from A to E (including ‘+’ and ‘-‘ qualifiers).

Read the BFSR page to learn more.
Use the BFSR Scorecard to generate an implied BFSR from user-defined inputs.

Once a BFSR is determined, it’s translated to a BCA from the Aaa to Caa3 scale (see Table 1 below).

To determine a bank’s final credit-risk rating, Moody’s considers the possibility of support to a bank to prevent a default. This evaluation of potential support incorporates Joint Default Analysis (JDA) to adjust the BCA to a deposit rating—the Local Currency (LC) Deposit Rating.

Read the JDA page to learn more.
Use the JDA for Banks Worksheet to calculate a user-driven joint default assessment and Local Currency Deposit Rating.

After the LC Deposit Rating is assigned, Moody’s considers the foreign currency ceiling applied to the nation in which the bank operates, to account for foreign-currency risk. The resulting rating is called the Foreign Currency (FC) Deposit Rating—also called the Issuer (Bank) Rating.

Using the FC Deposit Rating, Moody’s determines a Senior Debt Rating using a method called “notching.”

Subordinated debt, preferred stock, or hybrid instruments are typically assigned ratings one or more notches below the senior debt and deposit ratings to reflect higher expected loss rates, due to lower priority of claim.

Read the Guidelines for Rating Bank Junior Securities to learn more.

Moody’s National Scale Ratings (NSRs) are relative measures of creditworthiness within a narrowly defined peer group rather than the full universe of Moody’s rated entities—distinguishing it from the Moody’s Global Scale Ratings (GSRs). The NSR peer group is typically limited to those issuers active within a single domestic capital market.

Read the methodology: Mapping Moody’s National Scale Rating to Global Scale Ratings.