Fitch and S&P are thinking about opening a “daughter” in Russia

Fitch and S&P are thinking about opening a “daughter” in Russia


Earlier it was reported that Moody’s took the decision to close the subsidiary in Russia. It is the only Agency of the big three, which last 12 years have seen Russia’s “daughter”, the other two agencies operate in the country through branches.

MOSCOW, 10 Mar. International rating agencies Fitch and Standard&Poor’s has not yet made a final decision on the opening of subsidiaries in Russia, discuss this issue with the CBR, and examine the new legislation, according to the agencies.

Moody’s reported on Wednesday that during 2016 will recall about 150 national scale ratings assigned to Russian issuers. The company noted that the decision was made in light of legislative changes and other potential constraints that affect the assignment of national scale ratings in Russia.

In addition, Moody’s took the decision to close the subsidiary in Russia. It is the only Agency of the big three, which last 12 years have seen Russia’s “daughter”, the other two agencies operate in the country through branches.

New laws

According to the new law of the Russian Federation about the rating agencies, the “big three” — Fitch, Moody’s and s&P from mid-2017 to assign to Russia national scale rating, only if the country of the subsidiary and will not agree to withdraw the assigned ratings under pressure of foreign countries. In 2014, the EU and the US imposed sanctions against the Russian Federation, after which the international Agency withdrew the ratings of some companies and banks.

The head of the Analytical credit rating Agency (ACRA) Ekaterina Trofimova recalled that from the end of 2016 for Russian agencies and from mid-2017 to international agencies in accordance with Federal law for regulatory purposes will be used solely credit ratings on the national scale, has accredited the Bank of Russia by rating agencies.

“Accordingly, government agencies, and therefore commercial investors will choose a particular rating Agency (or agencies) from the register of accredited for making decisions about investing their funds,” she explained, adding that the AKP is doing everything to ensure that the business principles, reputation and analytical competence of the Agency were sufficient to obtain accreditation and further use of ratings for regulatory purposes, including the Ministry of Finance of the Russian Federation.

The dialogue with the Central Bank

“The new legislation requires the approval of the Central Bank to assign and review the ratings on the national scale. This would ensure that the activities of our subsidiaries would be in direct conflict with the normative commitments of the parent structure”, — said the head of Fitch in communications in the EMEA region (Europe, the Middle East, Africa) Rebecca O’neal.

According to her, Fitch led and continues to engage in constructive dialogue with the Bank of Russia to ensure that the business model and structure of the Agency continues to comply with the regulatory environment in the country.

“Fitch aims to work in Russia, and our role as a rating Agency is to provide objective and independent opinions about creditworthiness that allow investors to make informed decisions, in turn, supporting a strong and sustainable capital market”, — she emphasized.

The head of analytical service Fitch Linnell Ian (Ian Linnell) had previously stated that the Agency is considering the possibility of preservation of the branch structure of the subsidiaries in Russia instead of creating a “daughter” to comply with international sanctions imposed by Western countries against Russia. According to him, it is likely that the Agency will remain a subsidiary and will not assign national ratings.

Senior Director at S&P communications, EMEA mark Tierney reported that the Agency currently is studying the new law. “We are studying the new legislation and how it will affect our work,” he said.