Fitch Ratings

THE SCOOP

Making the grades

Founded by John Knowles Fitch as the Fitch Publishing Company in 1913, Fitch was one of the early leaders in providing financial statistics.  The Fitch rating system of “AAA†to “D,†introduced in 1924, has become the standard for the financial community.  Fitch, one of the four major credit-rating agencies (the others are Moody's, Standard & Poor's and DBRS), is the leader in providing ratings on debt issued by companies, covering entities in more than 150 countries.  The firm is dual-headquartered in New York and London.  In 1997, Fitch became a subsidiary of Fimalac, a large French business support services company, when it merged with London-based IBCA Limited, Europe's largest rating agency.  In 2000, Fitch acquired both Duff & Phelps Credit Rating Co. and Thomson BankWatch, thereby boosting its coverage and international personnel.

Super subsidiaries

Fitch Ratings is a part of larger Fimalac company called the Fitch Group which (excluding Fitch Ratings) is comprised of three main subsidiaries: Derivative Fitch, Algorithimics and FitchTraining.  Derivative Fitch is a rating agency dedicated to providing ratings and services for the collateralized debt organization and credit derivatives markets.  A wholly owned subsidiary of Fitch Ratings, Derivative Fitch has over 1,700 global credit derivatives under surveillance.  Algorithmics, a member of the Fitch Group, is the world's leading provider of enterprise risk solutions.  More than 300 financial institutions rely on Algorithmics' software, analytics and advisory services to make risk-aware business decisions, maximize shareholder value and meet regulatory requirements.  Supported by a global team of risk experts based in major financial centers, Algorithmics offers solutions for market, credit and operational risk as well as collateral and capital management.  London-based FitchTraining was established in 1987.  It provides financial analytic training with a specialization in credit, corporate and structured finance.

Bad credit

The field of one credit rating is one that is controversial and sometimes politicized.  Despite the standard disclaimer that warns that credit ratings shouldn't be used as the only indicator for making investment decisions, financial professionals put a high premium on the grades of these industry soothsayers.  As a result, companies like Fitch are subjected to an intense spotlight when they aren't delivering spot-on ratings.  But among the “big three†ratings firms, Fitch has earned a reputation for trustworthinessâ€"it was the only one to admit to its mistakes in the Russian debt-default crisis of the late 1990s.

But the Russian ordeal was just the tip of the iceberg for controversy in the credit-rating agencies.  The Enron scandal rocked the credit-rating agencies in 2001.  The rating agencies, in turn, claimed that Enron had provided them with misleading information.  In 2002, during the Senate hearing on the crisis, the SEC announced plans to launch a thorough investigation into the practices of the three agencies.  Later in 2002, similar scandals erupted at WorldCom and Global Crossing, and the agencies were once again questioned for their failure to expose the problems.  In late 2004, corporate CFOs, as well as lawmakers, were putting pressure on the SEC to increase governmental oversight of credit-rating agencies.

Introducing solutions

In 2008, Fitch Group announced that the firm will offer data and analytics services through the development of Fitch Solutions.  The service is positioned to provide a broader perspective and distribution platform for Fitch Ratings.  Fitch Solutions was developed to isolate Fitch Ratings and to give independence to its credit ratings which would then allow a separate entity to concentrate on the development of fixed-income products and services.  Under the umbrella of Fitch Solutions is Fitch Training, a specialist training firm that provides provision on training programs for professionals in the finance industry.  Trainers of Fitch Training are based in the United Kingdom, Continental Europe, Asia and the United States.

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Fitch Ratings


1 State Street Plaza
New York, NY 10004
Phone: (212) 908-0500
Fax: (212) 480-4435
www.fitchratings.com

STATS


  • Employer Type: Private
  • President and CEO: Stephen W. Joynt
  • 2007 Employees: 2,400

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