The pan-European markets regulator has launched a probe into the way the big three credit rating agencies evaluate banks to determine if the process is sufficiently rigorous and transparent, its chairman Steven Maijoor told the Financial Times.
The European Securities and Markets Authority has begun inspecting Standard & Poor’s, Fitchand Moody’s Investors Service and expects to finish by the end of the year. Credit rating agencies were not regulated in Europe until last year, when the European Union began requiring them to register with Esma. The rating agencies have attracted criticism first for their rosy opinions of structured products and banks before the financial crisis and for their mass downgrades of sovereigns and financial institutions amid the eurozone crisis.
“Bank ratings are very important because there is an interaction with sovereign ratings and government bonds,” he said.