Thursday

25th Aug 2016

EU-based credit rating agency buried

  • Irish bank - the idea was to break the US agencies' monopoly on ratings (Photo: Fergus Ray Murray)

Plans to launch an independent European credit agency have fallen apart after it failed to generate enough interest in the business world.

After three years of efforts, its co-founder renounced the plans in an interview with the German daily Handelsblatt on Tuesday (30 April).

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

“There were not enough investors,” Markus Krull, a former senior partner in the German-based consultancy firm Roland Berger, told the daily in an interview.

Berger, as a partner, planned to help launch the enterprise by seeking out 30 investors to create a foundation with some €300 million in start-up capital.

Krull envisioned an agency that would compete with the US-based equivalent Standard & Poor’s, Moody’s and Fitch.

All three US-based agencies work on a for-profit basis that Krull wanted to challenge with an agency based on a foundation model.

Investors, borrowers, and public administrations use the agency reports to help make investment and financial decisions.

The US-based agencies dominate 95 percent of the market.

All three have come under considerable criticism for how they have rated a number of sovereign states since the start of the financial crisis in 2008.

Standard & Poor’s and Moody’s settled lawsuits with Abu Dhabi Commercial Bank and King County, Washington, over the weekend and agreed to pay out claims that they defrauded investors just before the US housing crisis, reports the Financial Times.

Standard & Poor’s says the settlement is not an admission of guilt.

The US justice department is also suing Standard & Poor’s for $5 billion for allegedly handing out top credit ratings on subprime mortgage vehicles for large fees despite knowing their inherit dangers.

In January this year, the European Parliament voted through new rules on when and how credit rating agencies may rate state debts and the financial health of private companies.

The new rules will allow private investors to sue the agencies for negligence. It also places a cap on an agency’s shareholdings in the firms it rates.

“The new rules will contribute to increased competition in the rating industry dominated by a few market players,” said EU internal market commissioner Michel Barnier following the parliament vote.

Slovakia's Fico goes to Russia

The Slovak prime minister, whose country currently chairs the EU council, will meet the Russian leader ahead of upcoming EU talks on Russia policy.

News in Brief

  1. Switzerland sees increase in migrants from Italy
  2. Norway to build Arctic border fence
  3. Brexit leader Farage addresses Trump rally
  4. Finland holds 'IS fighter' over 2014 Iraq mass killing
  5. Commission allows Portuguese bank recapitalisation
  6. Ex-commissioner: my rules on emissions are not vague
  7. Leading Danish MEP steps down from post
  8. US cooperating with Turkey on Gulen extradition

Stakeholders' Highlights

  1. EFASpain is not a democratic state. EFA expresses its solidarity to Arnaldo Otegi and EH Bildu
  2. UNICEFBoko Haram Violence in Lake Chad Region Leaves Children Displaced and Trapped
  3. HuaweiMaking Cities Smarter and Safer
  4. GoogleHow Google Makes Connections More Secure For Users
  5. EGBAThe EU Court of Justice Confirms the Application of Proportionality in Assessing Gambling Laws
  6. World VisionThe EU and Member States Must Not Use Overseas Aid for Promoting EU Interests
  7. Dialogue PlatformInterview: "There is a witch hunt against the Gulen Movement in Turkey"
  8. ACCAACCA Calls for ‘Future Looking’ Integrated Reporting Culture With IIRC and IAAER
  9. EURidNominate Your Favourite .eu or .ею Website for the .EU Web Awards 2016 Today!
  10. Dialogue PlatformAn Interview on Gulen Movement & Recent Coup Attempt in Turkey
  11. GoogleA Little Bird Told us to Start Tweeting About Google’s Work Across Europe. Learn More @GoogleBrussels
  12. Counter BalanceThe Trans Adriatic Pipeline: An Opportunity or a Scam in the Making for Albania?

Latest News

  1. Let's fix EU copyright law, for innovation and creativity online
  2. French government tries to defuse burkini row
  3. EU to Turkey: Do you really want to join?
  4. US slams EU competition policies
  5. French diesel committee 'did not cover up for Renault'
  6. EU backs Greek ex-data chief over criminal charges
  7. EU must step up migrant relocation, say Italy and Greece
  8. Merkel seeks post-Brexit vision on EU tour