Multi-national ratings agency to launch as alternative to Big Three

LONDON Tue Nov 12, 2013 4:22pm GMT

1 of 2. A view shows the Standard & Poor's building in New York's financial district February 5, 2013.

Credit: Reuters/Brendan McDermid

Related Topics

LONDON (Reuters) - Credit ratings organisations from five countries are launching a new global agency, touting it as an alternative to the Big Three agencies which they say no longer meet the needs of the new globalised world.

In a statement on Tuesday, ARC Ratings said the agency would launch in London as a joint venture between CPR of Portugal, CARE Rating of India, GCR of South Africa, MARC of Malaysia, and Brazil's SR Rating.

A spokesperson said the agency would officially launch in December or January, a delay from the launch date of November 20 given in the statement earlier. The delay was due to logistical complications in bringing the five agencies together, the spokesperson said.

The credit ratings business is dominated by Moody's, Standard & Poor's and Fitch, which together are estimated to control more than 90 percent of the market. The former two are based in the United States while Fitch has dual headquarters in London and New York.

Ratings are a key part of the financial system as investors use them to judge how likely they are to get their money back, but the financial crisis has led to unease that the market is relying on them too much.

ARC said the dominance of the three amounted to an oligopoly of sorts, U.S. centric and prone to failures, as highlighted after the 2008 subprime crisis in the United States and the euro zone's more recent problems.

"Working together (the agencies), will provide ratings answers to the new multi-polar world economy in direct competition with US-centric agencies," ARC said in the statement, adding that its ratings would be guided by a "multi-perspective approach and local expertise".

"An automatic centre of gravity is replaced by a global cooperative approach to credit ratings," ARC added in a paper posted on its website.

The chief ratings officer of ARC will Uwe Bott, while Jose Pocas Esteves, currently at the Portuguese agency CPR, is to be CEO. The agency is registered with the European Securities and Markets Authority

(Reporting by Sujata Rao and Carolyn Cohn; Editing by Alison Williams)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
finchley wrote:
Well, it looks as though we might finally get some honesty on the quality of US bonds. I would sell them at high speed!

Nov 13, 2013 4:35pm GMT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.