UPDATE 1-EU's McCreevy to propose rating agency register

(Adds more details, background)

By Huw Jones

BRUSSELS, July 3 (Reuters) - Credit rating agencies, widely criticised as too slow to warn about the risks in products at the heart of the U.S. subprime crisis, will be required to register in the European Union, a top official said on Thursday.

"I intend to propose in October a registration and external oversight regime for rating agencies, whereby European regulators will supervise the policies and procedures followed by the CRAs (credit rating agencies)," EU Internal Market Commissioner Charlie McCreevy said.

"Reforms to the corporate and internal governance of rating agencies will form a part as well," McCreevy said in a speech.

Rating agencies -- a sector dominated by Standard & Poor's (MHP.N: Quote, Profile, Research), Moody's (MCO.N: Quote, Profile, Research) and Fitch (LBCP.PA: Quote, Profile, Research) -- are resigned to a registration system in the 27-nation EU as they are already required to register in the United States, bringing them under formal supervision of the Securities and Exchange Commission.

"The fact is that CRAs significantly contributed to the market turmoil by greatly underestimating the credit risk of structured credit products," McCreevy said.

Agencies gave high ratings to structured products backed by risky home loans that defaulted, leaving the products untradeable.

Banks with such products on their books have been forced to write down more than $300 billion leaving markets still unsettled a year into the subprime crisis.