Support The Moscow Times!

Russian Regulator Seeks Leverage Over Moody's, Fitch and S&P

International ratings agencies may soon have to create Russian subsidiaries governed by the Central Bank to continue operating in the country, daily newspaper Kommersant reported Tuesday.

Since the first sanctions on Russia over the Ukrainian crisis, the Russian government has been fighting to place Western-based international financial services working in the country under its regulatory thumb. U.S. payment systems Visa and MasterCard were the first victims: After cutting services to two blacklisted banks in March, they are now being forced to localize their services inside Russia.

Now agencies such as Fitch, Moody's and S&P, which have also suspended services to several blacklisted Russian companies, appear to be targeted. Last week, the Central Bank released draft legislation that would, for the first time, require foreign ratings agencies to receive accreditation in Russia and register their ratings methods with the regulator, Kommersant said, citing a copy of the bill.

"This requirement follows from the necessity of carrying out regulatory supervision of the ratings companies, regardless of the origin of their capital," Vladimir Chistyukhin, first deputy head of the Central Bank's department on financial markets, told the paper.

Currently, the "big three" ratings agencies — all of which are based in the U.S. — have only representative offices and affiliates in Russia. These are governed by U.S. and European financial regulators, but not by Russia's Central Bank.

The three agencies declined to comment on the draft bill but confirmed having received it. According to the letter, they must submit their comments and criticisms to the Central Bank by the end of this week.

The law is expected to go into force on Jan. 1, 2015.

It would in no way impact ratings agencies registered abroad, which Russian companies could still turn to for ratings services as they do now, Chistyukhin said. The legislation could, however, give rise to disparities between the ratings of Russian subsidiaries and their international parent companies, putting the recognition of the subsidiaries' ratings abroad in doubt, Kommersant said.

See also:

Visa, MasterCard Must Find Russian Partner to Avoid Paying Security Deposit

Sign up for our free weekly newsletter

Our weekly newsletter contains a hand-picked selection of news, features, analysis and more from The Moscow Times. You will receive it in your mailbox every Friday. Never miss the latest news from Russia. Preview
Subscribers agree to the Privacy Policy

A Message from The Moscow Times:

Dear readers,

We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."

These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.

We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.

Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.

By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.

Once
Monthly
Annual
Continue
paiment methods
Not ready to support today?
Remind me later.

Read more