Eurozone crisis

European rating agency in the pipeline

Published on 19 January 2012 at 12:17

"European rating agency moves forward this year," reports Diário de Notícias. The Lisbon daily reveals that Roland Berger Strategy Consultants — the largest European company in strategic consulting — is holding talks with several EU, as well as Swiss, financial institutions to try to raise approximately 300 million euros to create a European rating agency.

The aim is to create "private, non-profit organization", which could be launched in the first quarter of this year, the Lisbon daily writes. A European rating agency “promises greater transparency” to be able to compete with the three major U.S. agencies, Standard & Poor's, Moody’s and Fitch.

According to Roland Berger, the purpose of creating a European rating agency — something that several European leaders, like German chancellor Angela Merkel or EU commission president José Manuel Barroso have argued for — will -

... overcome the major problems of rating agencies, especially their monopolistic structure, and conflicts of interest that exist in the system’s current structure. (...) It will operate with an efficient cost model developed and approved by the banking sector. The model is based on Basel II — analysis of infrastructure and credit. At the same time, the whole rating process will be changed to ensure greater transparency. An online platform will be created in which all agencies can publish their evaluations. Investors must commit themselves to publish their own rankings or ratings or to opt for the rating agency of their choice.

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