The European Securities and Markets Authority (ESMA) imposed a total fine of €5,132,500 on three credit rating agencies belonging to the Fitch Group on Thursday, 28 March for breaching European rules aimed at avoiding conflicts of interest.
Between June 2013 and April 2018, 20% of the British, Spanish and French subsidiaries of the Fitch group were indirectly owned by one individual shareholder - who ESMA did not name - and who was also sitting on boards of three entities being rated by these subsidiaries.
The European rules, in force since 2013, identify as a conflict of interest the situation where a shareholder holding more than 10% of the capital of a credit rating agency simultaneously sits on the board of directors of a rated entity. In such a case, the credit rating agencies are prohibited from issuing new ratings for the entity in question - a prohibition that the three agencies had not respected.
The British subsidiary was therefore fined €3,195,000, the Spanish subsidiary €1,125,000 and the French subsidiary €812,500. ESMA points out that these amounts take into account measures taken voluntarily to ensure that similar breaches will not occur in the future.
The Fitch group reacted immediately. In a statement, it said “Fitch welcomes being able to now put this matter behind us, as it relates to breaches that occurred between 2013 and 2016”. It claimed that none of these breaches had any impact on the outcome of its ratings and that it no longer had any individual shareholders on the boards of rated entities.
The credit rating agency has the possibility to appeal this decision to the Board of Appeal of the European Supervisory Authorities. (Original version in French by Marion Fontana)