London-based ratings agency to compete against big three

A NEW credit rating agency, billed as a challenger to the biggest three groups, is set to launch in London next week.

Five existing agencies have set out to break into the global market, which is currently dominated by Moody’s, Standard & Poor’s, and Fitch Group.

Brazil’s SR Rating, Malaysia’s MARC, India’s CARE, South Africa’s GCR and Portugal’s CPR are co-operating to set up the Europe-based agency, which has criticised the way ratings agencies behaved before the financial crisis.

Announcing the venture, chief executive Jose Pocas Esteves, who is currently head of CPR, said: “ARC and its five founding credit rating agency network partners believe that the old methods and approaches are no longer sufficient for the post-Lehman financial sector landscape.”

In the US, the activities of credit rating agencies in the run-up to 2008 were criticised heavily by the Financial Crisis Inquiry Commission.

According to Deutsche Welle, the largest three ratings agencies have a 95 per cent market share.

ARC says that it will use “a multi-perspective approach”, including local expertise, with the aim of better pricing risk.