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New rating agency aims to save European SMEs from worst effects of Basel III

Europe’s economy depends in large part on 25 million SMEs, most of them unrated, that will suffer reduced availability and higher cost of credit thanks to Basel III output floors.

In July, Europe’s first certified credit rating agency for small and medium-sized enterprises (SMEs) was launched, holding out the promise that as many as 25 million SMEs across Europe may be able to obtain corporate ratings, which have traditionally been reserved for larger, publicly quoted companies.

The new agency is a commercial joint venture between two fintechs. Wiserfunding, founded in 2016 by professor Edward Altman and Gabriele Sabato, uses financial history and a range of publicly available structured and unstructured data to assess the creditworthiness of SMEs across Europe. It will work together with a competitor in the same field, modefinance, which was founded in 2009 by Mattia Ciprian and Valentino Pediroda to develop artificial intelligence solutions for the assessment and management of credit risk.

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