Fitch could reassess Italy operations after probe

MILAN Wed Nov 14, 2012 12:54pm GMT

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MILAN (Reuters) - Fitch Ratings may reassess the future of its operations in Italy after its Italian unit and two of its employees were indicted in a probe over sovereign debt downgrades, it said on Wednesday.

In a statement Fitch said it had restricted with immediate effect its market communication on ratings for Italian entities and issuance to formal published research only.

Prosecutors in the southern Italian town of Trani want to put seven former and current employees at Fitch and rival agency Standard & Poor's on trial for allegedly leaking information about their downgrades during market hours.

A judge now has to decide on the prosecutors' request.

Both S&P and Fitch have rejected the claims.

Fitch on Wednesday called the indictment of Fitch Italia and two members of its staff "an unprecedented manoeuvre that lacks any merit".

"All teleconferences, conferences in Italy and any similar events for the purpose of discussing Italian entities are suspended, and questions from third-party market participants such as investors or journalists will be referred back to our published comments," it said.

"If Fitch does not receive adequate assurances that this type of incident will not be repeated, we may have to re-evaluate the future of our operations in Italy."

The case focuses on a series of credit downgrades since 2011, including one by Fitch in January 2012, which prompted steep losses on Italy's stock and bond markets.

If the Italian case goes to trial it may reshape the long-running debate over liability of rating agencies for their credit opinions at a time of great global economic uncertainty.

(Reporting by Stephen Jewkes; Editing by Ruth Pitchford)

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