Union needs its own credit rating agency, says Randzio-Plath

Date: 03/04/03

By Peter Chapman

THE European Union should have its own ratings agency to counter the global monopoly of the industry's three US-based players, Standard and Poor's, Moody's and Fitch, an MEP demanded this week.

Christa Randzio-Plath, chairwoman of the Parliament's influential economic and monetary affairs committee, said without a European equivalent, key decisions affecting the credit worthiness of EU countries and companies would be left solely in American hands.

"Their power has grown so immense that we have to question whether we should have a European agency that's a sort of public service - they decide on the future of enterprises and also states."

She told European Voice that she will push the idea when MEPs table amendments to a draft directive setting out the information which listed companies should issue to the public, such as quarterly reports, and the forthcoming Green Paper on services of general interest.

However industry experts said global markets are too intertwined for it to make sense to have a specialist EU agency. Markets, they add, would continue to give more credence to the ratings of long-established agencies that they trust - even if their EU counterpart was granted official status and its ratings were mandatory. They also point out that a French-based holding company, Fimalac, has ultimate control over Fitch.

James Perham-Marchant, vice-president of Standard and Poor's, said: "Given the increasing globalisation of international capital markets it's difficult to envisage what role a European rating agency would play and how it would offer the investor community something that is not already available from existing agencies."

The European Union should have its own ratings agency to counter the global monopoly of the industry's three US-based players, Standard and Poor's, Moody's and Fitch, according to MEP Christa Randzio-Plath.