Securitization Rating Agency of the Year


The embarrassment for European credit rating agencies is certain even before the voting has started.

US Securitzation Awards 2022 – voting now live!” This is the call from GlobalCapital, inviting market participants to vote for the best rating agency when it comes to securitization. This is the choice:

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S&P Global Ratings and Moody’s Investors Service Both Are Feeling the Lack of Issuance Activity


S&P Global Ratings reported a revenue decrease of 15% to $868 million in the first quarter of 2022. Transaction revenue decreased 31% to $404 million. Transaction revenue was negatively impacted by a year-over-year decrease in debt issuance across all categories, but particularly within high-yield, which decreased approximately 68% year-over-year. Non-transaction revenue increased 7% to $464 million due to growth in annual fees, and in CRISIL revenue.

Revenue for Moody’s Investors Service in the first quarter of 2022 was $827 million, down 20% from the prior-year period, as geopolitical concerns, rising yields and elevated market uncertainty adversely affected issuance in all asset classes. Foreign currency translation unfavorably impacted MIS revenue by 1%.

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Top Credit Ratings from Google’s Search World

Agencies, Whistleblowing

Four US rating agencies give Triple-A credit ratings to a bankrupt bank?

On Friday 22 April 2022, the Amsterdam District Court, at the request of Amsterdam Trade Bank N.V. (ATB) and after hearing the Nederlandsche Bank N.V., declared ATB bankrupt. Declaring the bankruptcy means that a trustee has been appointed to wind up the Trade Bank and to represent the interests of the creditors and savers. The “Directie Financiële Markten” of the Ministry of Finance of the Netherlands informed about this.

If you search for this bank on Google three days later and want to know the credit rating, you will surprisingly find the following search result on Google:

“Ratings are an indicator of Amsterdam Trade Bank’s creditworthiness and security. … How secure is the Amsterdam Trade Bank?”

What follows is bound to mislead every investor, as Google consistently lists AAA (Triple A) credit ratings from all the leading US rating agencies.

Google Suche von Montag, den 25. April 2022, 14 Uhr

Google reportedly gets this information from a website in German with the domain “Kritische Anleger”, in English “Critical Investors”:

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If you continue to search for this allegedly triple-A-rated bank, encouraged by the AAA credit ratings reported by Google, you will find what you are looking for at the respected German foundation Stiftung Warentest. A message from Stiftung Warentest contributes to the confusion: “Amsterdam Trade is now called FIBR-Bank” (“Amsterdam Trade heißt jetzt FIBR-Bank“).

“Customers need to register again with FIBR”

FIBR is only a trading name of Amsterdam Trade Bank N.V. The risk of doing business with this bank, in particular giving money in the form of deposits, remains unaffected by this renaming. If you go to the FIBR website, you will not find any reference to the insolvency that has already occurred, only friendly smiling faces inviting you to deposit savings at this bank.

In fact, on October 23, 2015, the rating agency Moody’s not only downgraded the bank from an already speculative rating deeper to “junk level”, but even withdrew the rating:

Moody’s Investors Service has today downgraded Amsterdam Trade Bank N.V.’s local- and foreign-currency long-term deposit ratings to B2 from Ba3, as well as the bank’s baseline credit assessment (BCA) to caa3 from b2. The adjusted BCA was downgraded to b3 from b1. The outlook on the long-term deposit ratings is negative.

Following this rating action, Moody’s will withdraw Amsterdam Trade Bank’s ratings for its own business reasons.

Moody’s Investors Service, October 23, 2015

So the question remains why Google’s search engine shows top credit ratings from the US credit rating agencies for the Russian-run bank in the Netherlands.

Sell Pressure at S&P Global Delights DBRS Morningstar


DBRS Morningstar will benefit from LCD data and news, supporting credit analysts and credit investor workflows.

S&P Global Market Intelligence’s Leveraged Commentary & Data (LCD) combines real-time news, data, tools, and analysis on the U.S. and European leveraged loan, high-yield bond, distressed, and investment-grade corporate markets. Produced by S&P Global’s own team of experienced journalists and analysts, LCD provides investors with the market-making news and in-depth research they need for their segment.

How does Morningstar think it will make money by buying this unit from its competitor? How do they think about the justification and financial value creation from the 11-12 times sales multiple paid? It was not a voluntary sale from S&P Global. Since it was a forced divestment to fulfil merger regulatory conditions – was it a competitive process?

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A Not So New New Rating From Moody’s

Agencies, Definitions, Scales

Moody’s Investors Service is seeking feedback by May 05, 2022 from market participants on proposed changes to its Banks Methodology. The key proposed revision is to introduce new ratings that exclude government support (XG ratings) in Moody’s methodology for banks. The rating agency is currently collecting comments and opinions from market participants.

Hence a remark on the one hand on the history of this approach and on the other hand on the problems that arise in practical application:

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Sanctions Against Russia Not Thought Through to the End

Agencies, Investors

The exuberant regulation of the credit rating agencies is always sprouting new flowers. The instrumentalization of rating agencies for political goals is being discussed at the United Nations, although right now it is becoming clear what negative effects it has when rating agencies are used for political sanctions.

At the “High Level Meeting on the Role of Credit Rating Agencies in the implementation of the 2030 Agenda for Sustainable Development” high-ranking representatives of the United Nations Department of Economic and Social Affairs are discussing issues that are not relevant to current affairs. The meeting is about “old acquaintances”, criticism of the leading rating agencies. It’s about banalities like the fact that credit ratings play an important role in international capital markets as they provide creditors with assessments of a debtor’s relative risk of default. “Nonetheless,” writes the United Nations Department of Economic and Social Affairs, “inaccurate ratings can impact the cost of borrowing and the stability of the international financial system, as demonstrated during the 2008 global financial crisis. During the economic crisis that emerged as a result of the COVID-19 pandemic, attention has returned to the role of credit ratings on debt sustainability and stability.”

The leading international agencies have been aware of the issues raised by the debaters for many years. The problems have been addressed and systematically tackled for some time. As a consequence of the discussions, it can only be stated that the leading agencies may not have been sufficiently successful in documenting their work to date in a transparent manner and also in communicating it to the appropriate places.

In the middle of the war with Ukraine, much more urgent or questions are overlooked. Today experts from Switzerland have their say and hit the nail on the head. The main issues are as follows:

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Morningstar Takes on the Regulation

Agencies, Registrations, Regulations

Looking forward to 2022, Morningstar, Inc.’s Joe Mansueto, Executive Chairman and Chairman of the Board, and Kunal Kapoor, Chief Executive Officer, expect the Board to support Morningstar’s strategic initiatives including an initiative they call “Organizational Design Responsive to Changes in our Regulatory Landscape”.

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Investment Guidelines of German Municipalities in Practice

Agencies, Marketing, Regulations

US rating agencies remain at an advantage over their European competitors. As the practical example of regulation in Hesse shows, the investment guidelines for municipalities cement the dominant position of the US rating agencies for every rated investment.

Even the German rating agencies are out of the question for most communities. Since the ratings of the leading US agencies are prescribed in the communities, the services of the German agencies are – from this point of view – dispensable. Since the municipalities have to set their own investment guidelines and do not think about the local agencies, the smaller competitors of the US market leaders are left out.

Section 108, paragraph 2 of the Hessian Municipal Code (HGO) obliges the municipality to ensure sufficient security in the context of the careful and economic management of its assets when investing money, whereby it should bring in an appropriate return.

In doing so, the municipality has to minimize financial risks; speculative financial transactions are prohibited. They are legally obliged to do so in accordance with section 92 (2) sentences 2 and 3 HGO. The financial budget of the municipality is to be managed thriftily and economically. The community has to minimize financial risks. Speculative financial transactions are prohibited.

Deposits are compatible with Section 92 (2) HGO and Section 108 (2) HGO if the municipalities ensure that the security takes precedence over the possible return. The assets are to be managed carefully and economically and properly accounted for. Sufficient security is to be ensured for financial investments; they should bring a reasonable yield.

This principle must also be observed in times of low and negative interest rates. As of October 1, 2017, municipal deposits will no longer be protected by the voluntary deposit protection fund at private banks. Deposits existing as of October 1, 2017 are grandfathered.

The deposit protection instruments of the Savings Banks Finance Group and the cooperative banks also do not offer any protection for public sector deposits. Nevertheless, there is a lower risk here due to the institutional security. With the abolition of grandfathering, deposits at private banks have become less secure. However, they are not to be described as speculative.

The Hessian municipalities have to issue investment guidelines for investments before they are deposited. These regulate the security requirements, the administration of financial investments by the municipality and the regular reporting obligation.

The guidelines are to be decided by the local authority and are to be made known to the supervisory authority. The investment guideline of a Hessian municipality is only valid for investments that are made after the entry into force. Existing financial investments made on the basis of the investment guidelines of the Hessian Ministry of the Interior and Sports on municipal investment transactions and derivative financial transactions (StAnz. 2009, p. 701), which have expired, remain unaffected by these provisions.

As the State’s highest-ranking administrative authority, the Ministry is not only involved in government activities, but is also in charge of the legal and technical supervision of the States institutions that come under this department. The tasks of the Ministry of the Interior comprise for example the departments of security, municipal affairs and general affairs of the Interior and Sports.

Due to these requirements, the municipal statutes for investing their liquid funds are based on model guidelines, which usually contain the following provisions:

If the municipality intends to invest in credit institutions that are not subject to any deposit guarantee or institution protection, it must inform itself particularly carefully. In particular, the credit institution’s rating should be used as a guide.

When it comes to investing liquid funds, the municipality generally limits itself to the following forms of investment:

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US Hedge Funds – US Credit Rating Agencies


A quant technology provider, SigTech, has analysed data on the global hedge fund industry and identified key trends around growth, new launches and investment strategies. According to their findings and couting 27,255 active hedge funds globally, 67% of all hedge funds globally and 70% of all new fund launches are US-based Crypto hedge funds appear for the first time in the top 10 of hedge fund strategies

USA accounts for 67% of the world’s hedge funds, followed by the UK which has 8.6%. When it comes to the cities that have the largest concentration of hedge funds, unsurprisingly New York is the clear leader with nearly 7,000 funds (25.0% of total), followed by London with over 2,000 (8.2%), and Hong Kong with nearly 1,000 (3.6%).

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Switch Off Moody’s German Website


In 1991 Moody’s presented itself in full-page advertisements as the first German credit rating agency. Moody’s Investors Service now achieves an average operating margin of over 60% worldwide. However, after three decades, the German-language website of this leading international agency is still in a deplorable state. After so many years, Moody’s German website still does not live up to its claim to be the “first German credit rating agency”.

It is due to the special history of the Federal Republic of Germany after the Second World War that, in contrast to France and other neighboring countries, in Germany, practically everyone had to learn English in such a way that every German could obtain information from sources in English language. A large number of American soldiers were stationed around the financial center of Frankfurt am Main until the 1990s. The British used to be numerous in other parts of Germany. In the financial sector in particular, the English language became so established that today it is even the internal working language in some banks.

Against this background, it is more than understandable if hardly anyone at the US credit rating agency thinks about what is on the German website. Anyone who can afford a credit rating from Moody’s Investors Service is sure to speak English. The most important functions of this credit rating are in the international financial markets anyway, so that this service is closely linked to the world markets. The language of the world’s financial markets has remained English to this day.

Even if the professionals get information from English-language sources, it does matter what the German-language website of a leading rating agency looks like. This can be emphasized in particular because search engines such as Google are now structured in a user-oriented manner and take into account the language in which the browser is set or which language the user of a browser prefers. Therefore search results are also found on Moody’s German website, so that the searcher gets a corresponding impression of the website and the quality of the services of the rating agency “Moody’s Investors Service”.

The carelessness with which Moody’s Investors Service website is maintained is unworthy of a leading rating agency. The business of a rating agency is to provide reliable information to the financial markets. Like hardly any other company, every letter counts for a rating agency. The assessment results are expressed in letter codes. If a letter is missing, this can make a significant difference in the meaning of the judgment for the financial markets.

The credit rating scale is an ordinal scale, the distances of which are not to be interpreted uniformly as in the case of an interval scale. The “risk distances” can vary between one level and the other. On the credit rating scale, every letter counts. Each rating symbol on the scale has its own definition that is important to read and understand.

Therefore, if the spelling is sloppy, it shakes readers’ confidence. Do they mean A or B or maybe even C? Double A or triple A? The wrong letter can cost issuers a lot of money, just as investors can lose a lot of money by relying on the wrong letter code. Even if the databases ensure that the ratings are displayed correctly, it shakes confidence in the rating agency’s performance when a remarkable number of errors are made in Moody’s official German website.

It is believed that around 130 million people worldwide speak German as their mother tongue. German is the most widely spoken mother language in the European Union. In addition, German is the official language in four countries: Germany, Austria, Belgium and Luxembourg. German is also an official language in Switzerland and Liechtenstein. There are also German-speaking minorities in more than 40 countries around the world.

A strange gender indifference

This important position of the German language is contradicted if, after calling up, you first read about Africa and contacts for Africa:

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To be politically correct nowadays it is important how to address people. “Moody’s chooses to challenge the status quo and continuously champions gender equality through our insights, workplace programs and community partnerships. Diversity makes us stronger and we all benefit when we move forward together.” Moody’s writes that and even has a video ready. Article 21 (non-discrimination) of the Charter of Fundamental Rights of the European Union prohibits discrimination based on sexual orientation.

Therefore, it must unsettle the reader when what appears to be male employees are given female job titles. This is particularly annoying when dealing with external contacts. Should the person be addressed as a man or as a woman? Or even as diverse? Interested parties of the rating agency are embarrassed to possibly address a man as a woman or, conversely, a woman as a man. On Moody’s German website, a female position designation is assigned to the photo of a man. A person with a male name is represented as the female holder of the position. This is evident in all of the following four examples:

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Only four examples are mentioned above. It would go beyond the scope of this blog post at this point to list all other cases of doubt and errors to be found on In any case, the examples show the lack of respect for the distinction in the German language between male and female position titles and their holders.

Because the attribution of female titles to male names, female names to male titles, and portraits of men to female positions and portraits of women to male positions is so inconsistent, the viewer cannot readily identify in which cases errors are involved or the seemingly female person actually wants to be addressed as a man and vice versa.

“Moody’s continued inclusion in Bloomberg’s Gender-Equality Index is a strong testament to our ongoing work to support women in the workplace,” said DK Bartley, Chief Diversity Officer at Moody’s, when Moody’s announced that it has been included in the Bloomberg Gender-Equality Index (GEI) for the third year in a row. “As we look ahead, our actions will continue to be guided by our values – namely to foster an environment at Moody’s where all employees can thrive.”

Moody’s was recognized for ongoing leadership in promoting gender equality among its peer companies in the global business community. On the German website, however, there is no indication that the genders would be taken into account – at least if you look at the examples above.

A not very German website

For every new customer of a rating agency, it is of particular importance to learn the principles according to which he has to calculate the costs and prices of the agency’s services. Anyone who can expect high credit rating fees should be able to clarify in advance the principles according to which these fees are calculated.

There is also a button on Moody’s German website that can be used to access further information. Since it is in German, the user should assume that he will also receive information in German here. But this is not the case. Instead, a PDF file opens in English with very vague and general explanations:

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For customers from German-speaking countries, it is particularly important to know the exact regulatory conditions under which credit ratings are created in Europe. This is especially true when it comes to an international rating agency that has to meet the requirements of different legal systems at the same time. But these documents, where every word counts, are only available in English. Here, too, only an English document is hidden behind the German-language link:

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The German reader has to expect surprises everywhere. Links lead to pages in English, which the reader can expect to find in German. But that’s not all, because there are more special features. The reader has to work his way through a gibberish of German and English in some places:

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However, the reader must also be happy to find any documents at all. So every German reader will certainly prefer to download an English text than none at all, e.g. in this case – anyone who wants to obtain binding information about the products from Moody’s Investors Service and therefore clicks on the link for products ends up nowhere, depending on which page you are looking for this information from (website accessed on February 26, 2022):

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Warning about Moody’s numbers

Most Germans probably already take for granted the mistakes they find in texts that have been translated from English into German. This also applies to the translations of texts from this international rating agency. Nevertheless, the indication that the translations are wrong must be permitted here in our repair shop.

For example, quintillions appear instead of trillions. The German word for trillion is “Billion”. The German translation for “one billion” (one thousand millions) is “eine Milliarde”.

The error is not to the detriment of the rating agency, because the German reader now believes that the rating agency is 1000 times larger (see But the fact of the matter is that Moody’s has only rated one-thousandth of what it says here in German language.

Probably everyone knows the mistakes with the comma, because in English a comma is put where in German a period is made. So Moody’s doesn’t speak of one and a half analysts, but of fifteen hundred. While the error here is funny, the comma should be properly placed when it comes to money.

Overall, however, the errors show that Moody’s German website is obviously not intended to be a maintained and up to date source of information. Therefore the website could simply be switched off. This could be the safer way for the US rating agency to avoid intervention by the European Securities and Markets Authority. Due to the EU regulation on rating agencies, the following Moody’s agencies would potentially be examined if the supervisory authority were to develop general doubts about the correctness of the publication practice:

  • Moody’s Investors Service Cyprus Ltd
  • Moody’s France S.A.S.
  • Moody’s Deutschland GmbH
  • Moody’s Italia S.r.l.
  • Moody’s Investors Service España S.A.
  • Moody’s Investors Service (Nordics) AB 

Translation problems

While some of the errors above just bring a smile and can be corrected with a few clicks, greater difficulties lie in the accurate translation from English to German. Strictly speaking, this begins with the term credit rating, because Moody’s translates “credit rating” with the word “Kreditrating”, which contains the word “Kredit”. “Kreditgeschäft” is defined by the German Banking Act in § 1 KWG.

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Moody’s Sets the Standard for Africa


When people in Africa spoke of an independent credit rating agency – independent of the three leading US rating giants – they were talking about “Global Credit Rating” from South Africa, which had made a name for itself on the entire African continent. GCR is a leading credit rating agency in Africa with offices across the continent including South Africa, Nigeria, Senegal, Kenya and Mauritius. That time is now over: Moody’s Corporation announced today that it has agreed to acquire a controlling interest (51%) in Global Credit Rating Company Limited (GCR).

“GCR’s ratings play a significant role in the growth of Africa’s financial markets by providing critical insights into credit across a range of economies and sectors,” said Rob Fauber, President & Chief Executive Officer of Moody’s. “By combining GCR’s successful domestic operations with Moody’s global expertise, we have a unique opportunity to expand Moody’s presence in a high-growth region.”

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Les Agences de Notation – The Credit Rating Agencies


Rating agencies have been the subject of a number of controversies since the late 1990s, writes Norbert Gaillard in his latest book “Les agences de notation“, published in Éditions La Decouverte, Paris 2022. The Asian crisis of 1997/98, the Enron scandal of 2001 , the debacle on the subprime market in 2007/2008 and the sovereign debt storm of 2010-2011 have impressively demonstrated the influence of the credit rating agencies on the financial markets. At the same time, however, the difficulties and limitations of the system also became apparent, as the author shows in his book.

  • A first point of criticism has long been the lack of transparency in the methods used to prepare the assessments that are so important for the financial markets. The author therefore examines the question of how the solvency of states, companies and other organizations as well as banks is assessed. Do the agencies base this on mathematical-statistical models?
  • A second point of criticism is directed at the strong concentration in the rating industry, because there are only three agencies that dominate the market. The author therefore investigates the influence this concentration of power can have on the credit ratings awarded.
  • The author sees a third point of criticism in the way in which the credit rating agencies generate income, namely mainly from fee payments by issuers, which could therefore influence the independence and neutrality of the judgments.
  • Norbert Gaillard identifies a fourth area of ​​criticism in the historical failures in various crises that the rating agencies have experienced in the course of their more than hundred-year history. In essence, this is about the damage that resulted from the fact that some imminent insolvencies were not recognized in good time.
  • The author investigates a fifth point of criticism, which consists in the accusation that the rating agencies would overreact, i.e. convert news too quickly into upgrades or, in particular, downgrades.

The book is divided into five chapters. The first chapter provides an understanding of the rating industry and the emergence of the oligopolistic structure in this market. The second chapter is dedicated to definitions, interpretations, typologies and modalities of assigning ratings. These representations of the author are of lasting value, since he meticulously processes the history of the rating agencies. Two other main chapters deal with the assessment of public and private issuers. Finally, the fifth chapter deals explicitly with the strengths and weaknesses of the rating agencies, with their conflicts of interest, their reputation, the regulations as well as the influences on rating changes.


From his diligent survey of facts, the author draws the wise conclusion that the situation of the rating agencies is paradoxical in three ways. Historical experiences with the rating systems have tarnished the reputation of the rating agencies. Nevertheless, the credit ratings continue to be used by investors and also by supervisory authorities. This kind of immunity of rating agencies has boosted their earnings (and hence their market caps). Even if the agencies have lost some of their influence, they remain more indispensable today than ever before – of all times, at a time when private and public debt is exploding.

Norbert Gaillard therefore calls for a central debate on the analysis of credit risks. He laments the lethargy of politicians, supervisors and institutional investors who are neglecting the “dizzying debt boom” (Norbert Gaillard). He appeals to the rating agencies not to let themselves be taken over by the debt euphoria, but to show market participants the limits of debt growth.

Disclosure Requirements for Initial Reviews and Preliminary Credit Ratings Discussed

Agencies, Authorities, Other, Regulations

The European Securities and Markets Authority (ESMA) published its “Final Report” with “Guidelines on Disclosure Requirements for Initial Reviews and Preliminary Ratings“. The purpose of these Guidelines is to deliver guidance that will address inconsistencies in the application of these requirements by Credit Rating Agencies (CRAs), and by extension reduce the risks that are posed by rating shopping to the extent it is possible under the existing provisions of the CRA Regulation.

ESMA has conducted a public consultation on these Guidelines in order to gather the views of CRAs and other relevant stakeholders. A number of amendments and clarifications have been introduced into the final guidelines in order to take account of the views expressed during this consultation.

In one of the answers it was noticed that ESMA’s proposal assumes good behavior on the part of the issuer, although it is precisely about the cases in which an issuer hides a poorer rating. The rating can refer to a shelf registration or any other vehicle with a different LEI or an instrument with a different ISIN, which can be legally differentiated, but represent the same economic risk. These cases are particularly difficult to grasp when the greedy rating agency also collaborates on behalf of the issuer against competing agencies.

“However,” writes ESMA, “a number of respondents raised specific concerns over the provision of an LEI or ISIN for each disclosed instance. Specifically, one respondent outlined that not all entities currently have an LEI/ISIN and that this can depend on the maturity of the entity seeking a rating, its industry, or the stage of the considered transaction.” To address this issue, it was advocated to replace a missing LEI by the “reporting company’s unique key“ or unique rating identifier, as reported to ESMA under Commission Delegated Regulation (EU) 2015/23, while other respondents advocated for the exclusion of initial assessments for which an LEI and/or ISIN had not been provided from the proposed disclosures. This was on the basis that it would be difficult to monitor other CRAs’ public disclosures to assess whether that CRAs provided an initial review or preliminary rating for that same transaction.

Concerning the LEI or ISIN, ESMA now considers that it is not a point that needs to be populated in the disclosure if that information is not available to the CRA at the time of making the disclosure. “However, the CRA should back-fill this data point on subsequent publications when this data becomes available to the CRA”, writes ESMA.

In its public consultation, ESMA asked whether respondents agree that ESMA’s proposed timing of disclosures would better enable investors and the market to identify where rating shopping may have occurred. The wise choice of the timing of publications is a differentiating factor between the rating agencies. Investors and issuers prefer agencies that know how to choose their publication times sensibly. Rating agencies compete with each other to choose the wisest possible time for publication, for example before or after the market closes, before, after or at the same time as other notifications, etc. It takes many years of experience to understand the complex constraints and interests of issuers (and their boards and shareholders), banks, law firms, auditors, rating advisors, institutional and private investors, etc.

According to ESMA’s evaluation of responses, one respondent agreed that the proposed timing of these disclosures will better enable investors and the market to identify where rating shopping might have occurred, on the basis that “since all CRAs will publish an updated list on the same day of each month, it should enable investors to check the issuers and issuances”. Another respondent questioned whether the uniformity of dates would create a risk of a race to the bottom in terms of timing.

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Gender Equality as a Competitive Advantage

Agencies, Analysts

The Bloomberg Gender-Equality Index (GEI) is including Moody’s Corporation for the third year in a row. Moody’s was recognized this year again for ongoing leadership in promoting gender equality among its peer companies in the global business community.

The rating agency is not just following a fashion trend here. Since questions about gender equality play a role in ESG ratings and are also mentioned by the United Nations as part of the Sustainable Development Goals, which have only been determining the actions of economic actors worldwide since 2015, this impression could arise. In fact, the agency has been able to gain an advantage for many years by being an attractive employer for women. Women are often the better analysts for a variety of reasons that cannot be explored here.

“Moody’s continued inclusion in Bloomberg’s Gender-Equality Index is a strong testament to our ongoing work to support women in the workplace,” said DK Bartley, Chief Diversity Officer at Moody’s. “As we look ahead, our actions will continue to be guided by our values – namely to foster an environment at Moody’s where all employees can thrive.”

The GEI is a reference index that measures and tracks the performance of public companies across five pillars: female leadership and talent pipeline, equal pay and gender pay parity, inclusive culture, anti-sexual harassment policies, and pro-women brand. The index is designed to help investors direct capital to companies committed to supporting gender equality through proactive policies and transparency.

What Moody’s is working on

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US Agencies’ Market Shares Remain a European Debacle


The excessive regulation of rating agencies in the European Union (EU) has failed to achieve its goal.

The dominance of US rating agencies remains. Their ratings are practically the only decisive factor for the allocation of the economic resource “capital” in Europe. The three leading US agencies S&P Global Ratings Europe, Moody’s Investors Service and Fitch Ratings now account for 92.19% of turnover – and that even after “Brexit”, although the US agencies in the Anglo-Saxon region have natural advantages and these turnover shares are no longer included in new calculations.

The market share of these three agencies, S&P Global Ratings Europe, Moody’s Investors Service and Fitch Ratings, is, for example, 87.02% after 2012 and 91.07% in the last year 2019, now 92.19% in 2020. Politicians in Europe once thought they could use the opportunity of the global financial crisis to put the US agencies in their place.

It should also be noted in these figures that a number of credit rating agencies took steps to ensure the continuity of their rating activities before the UK’s exit from the EU was completed on December 31, 2020. Rating agencies, which – like the US market leaders – have a significant presence in the UK, have taken different approaches to restructuring their businesses. These changes impacted rating agencies’ applicable trunover from EU credit rating activities in 2020 and are reflected in the changes in rating agencies’ market shares in this year’s market share report.

Against this background, the changes in market share at S&P Global Ratings Europe and Moody’s Investors Service, but also at DBRS Ratings, can be seen in particular. With the new allocation, S&P Global Ratings Europe increases its market share in 2020 to 51.77% (from 40.40% in 2019), while Moody’s Investor Service keeps more sales in the United Kingdom (market share in the EU in 2020 only 30.12% after 33.12% in 2019). DBRS Ratings (1.11% 2020 after 2.99% 2019) as well as AM Best Europe-Rating Services (market share 2020 only 0.41% after 0.95% in 2019) lose market shares. All agencies that have given up market share have in common that they have their parent companies on the American continent and their main focus of activity in the most important European financial center, London, which was affected by Brexit.

Against the background of the effects mentioned, the increase in the market shares of the rating agencies remaining in the EU moves in the cosmetic area. CERVED Rating Agency (increase to 1.18% 2020 after 0.84% ​​2019), Scope Ratings (increase to 1.00% 2020 after 0.62% 2019) and CreditReform Rating (increase to 0.84% ​​after 0.53%). From the calculation mechanics of the market share calculation it follows that the other agencies can also show market share gains, although the dominance of the US agencies has not been broken.

The table published today by the European Securities and Markets Authority (ESMA) contains a list of all CRAs registered in the EU under the CRA regulation. For each rating agency, ESMA provides the applicable total market share. Finally, ESMA provides an indicator of whether a rating agency has an overall market share of less than 10%.

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Parthenon Capital Partners Bets on KBRA


KBRA, a full-service global rating agency committed to innovation and integrity, announced today it has entered a deal with leading growth-oriented private equity firm Parthenon Capital Partners who will acquire a majority stake in the company.

KBRA is a global credit rating agency found­­ed in the wake of the global financial crisis. “When KBRA was founded,” says KBRA CEO, President, and Co-Founder Jim Nadler, “our mission was to provide the market with timely, valuable, and transparent ratings and research. Over the past 11 years, KBRA has set the standard for engagement with investors, which has led to our leadership position across many markets. This investor engagement and outreach has also led to KBRA’s acceptance and reliance among issuers, policymakers, and key opinion leaders. As we continue to expand both domestically and abroad, we are excited to partner with Parthenon to accelerate our future growth.”

There are more rating agencies around the world fighting to break even than those that, like the leading agencies Moody’s and S&P Global, can offer top returns. In order to consolidate the rating industry, there is speculation as to how credit rating agencies could be merged or taken over in order to oppose the two leading agencies with another competitor with a global presence.

KBRA counts more than 400 employees across its five offices in the U.S. and Europe. The company has issued over 51,000 ratings with nearly $3 trillion in rated issuance since its inception in 2010. KBRA provides ratings and research across all sectors from its Corporate, Financial, and Government (CFG) and Structured Finance units. The company also delivers high-quality data, information, and tools to the market through innovative technology across its KBRA Analytics platform, including corporate and financial sector credit information and data and analytics.

“KBRA has quickly become a leading voice among the major global rating agencies. The market clearly relies on KBRA for holistic, transparent and thoughtful credit ratings and research” said Zach Sadek, a partner at Parthenon Capital.

“KBRA’s strong culture valuing integrity, ratings quality and customer service positions the firm for continued growth and success” said Brian Golson, Co-CEO of Parthenon Capital. “We look forward to partnering with KBRA’s passionate team to support their next chapter.”

Parthenon Capital’s financial advisor was Newbold Partners LLC and its legal advisor was Kirkland & Ellis LLP. KBRA received legal advice from Gunderson Dettmer LLP and Shearman & Sterling LLP.

New On-Chain NFT Art Platform

Agencies, Uses

A leading online art marketplace, art market data and analytics provider, and global newswire, announced “ArtNFT”: this is Artnet AG’s launch of its on-chain NFT platform, its NFT Advisory Board, and ‘Artnet NFT 30’ report.

Artnet AG is listed in the Prime Standard of the Frankfurt Stock Exchange, the segment with the highest transparency standards. The majority of operations are run through its wholly-owned subsidiary, Artnet Worldwide Corporation, a New York based entity founded in 1989. Artnet Worldwide Corp. owns a London based subsidiary, Artnet UK Ltd.

Artnet’s marketplace connects leading galleries and auction houses with artnet’s global audience, offering a curated selection of over 250,000 artworks for sale worldwide. Artnet Auctions, the pioneering online-only auction platform, offers unprecedented reach, liquidity, and efficiency.

“As a pioneer of the online art industry, artnet is perfectly positioned to embrace the NFT space. Our goal is to bridge the gap between the crypto community and the traditional world of fine arts,” said Colleen Cash, Vice President of Artnet Auctions.

Artnet has an unparalleled 60 million unique users annually, making it the largest global platform for fine art. Founded in 1989, Artnet has revolutionized the way people discover, research and collect art today.

ArtNFT, Artnet’s first, on-chain NFT platform will launch on December 15, 2021, with a curated selection of works from the community’s top NFT artists. As an on-chain platform, Artnet’s goal is to provide collectors with a transparent, efficient, trustworthy, and integrated experience in their discovery and purchase of NFTs.
In order to provide the best possible works and user experience, Artnet also established an NFT advisory committee, bringing together industry experts and market and opinion leaders in the field.

Alongside the ArtNFT platform, Artnet will also publish its ‘Artnet NFT 30’ report, sponsored by ApeNFT. Harnessing the expertise of the Artnet News team and market data, the report shall provide a deep analysis of the NFT space and the people shaping its future. The development must be observed by everyone who deals with art ratings. Artnet’s data is a mission critical resource for the art rating industry, with a database of more than 15 million auction results and AI and ML driven analytics providing an unparalleled level of transparency and insight into the art market.

With the simultaneous release of the ArtNFT auction platform, the ‘Artnet NFT 30’ report, and supporting interviews with key players, Artnet is poised to become a destination for NFT artists, collectors, and professionals – continuing the company ethos of spearheading transparency, innovation, and positive change for the art industry. “The NFT world has built a multi-facetted community, and we are excited to introduce ArtNFT as a space to discover and engage with these cutting-edge works. With this launch, we are combining artnet’s global reach, knowledge and expert curation to deliver an integrated experience for the digital art world,” explained Artnet CEO Jacob Pabst.

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Scoring And Being Scored


Moody’s Corporation announced today that it has received an ‘A’ score from CDP on climate action for the second consecutive year. The top score recognizes Moody’s as one of a small number of high-performing companies out of nearly 12,000 that are leading actions to cut emissions, mitigate climate risks and develop the low-carbon economy.

It is the business of rating agencies to judge other companies. Rating and being rated – that is the practice at Moody’s. Not all rating agencies follow this model.

“As a member of CDP’s Reporter Services and Supply Chain programs, Moody’s Corporation has demonstrated environmental leadership and commitment to curb climate change within their business, as well as among their suppliers. Looking ahead, we are excited to see their continued dedication to transparency and prolonged effort to securing a net-zero, sustainable world,” said Simon Fischweicher, Head of Corporates and Supply Chains for CDP North America.

In 2021, Moody’s accelerated its commitment to achieve net-zero emissions by 2040, bringing its original target forward by ten years, and advanced its validated, interim net-zero science-based targets. Progress on these targets can be viewed in the following reports:

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Moody’s Updated Investor Presentation


Moody’s Corporation posted an updated management presentation for investors on its website,, reflecting certain information regarding the Moody’s results for the three months ended September 30, 2021, as well as updated full-year 2021 guidance as of October 28, 2021, and its posting is provided pursuant to Regulation FD. Senior management is expected use this updated presentation during meetings with analysts and investors.

According to the new presentation, Moody’s no longer sees itself as just a credit rating agency, as it was once split off from Dun & Bradstreet. Moody’s sees itself equally as a provider of financial intelligence and analytical tools supporting our customers’ growth, efficiency and risk management objectives and therefore as a global integrated risk assessment firm providing credit rating opinions, analytical solutions and insights that empower organizations to make better, faster decisions.

With Adjusted Operating Margin for Moody’s Investors Service of 61.5%, the rating agency is still the main cash cow, while Moody’s Analytics operates with a margin of 29.7%. Moody’s complete investor presentation can be downloaded here.

Use of ESG Rating Agencies Will Increase Dramatically


Nearly one in three (30%) pension funds and institutional investors say their use of ESG rating agencies will increase dramatically over the next three years, and a further 38% believe it will increase slightly. This is according to new research from quant technologies provider SigTech, who surveyed institutional investors across North America, Europe and Asia that collectively have around $935 billion of assets under management (please see the attached press release).

However, the findings reveal that 66% of professional investors interviewed said they struggle with ESG rating agencies because they can provide wildly divergent ESG scores at a company level.

Over the next three years, 14% of institutional investors surveyed by SigTech said they expect investor activism to increase dramatically, and a further 52% anticipate a slight rise.

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Moody’s Extends Pole Position with Bogard


Moody’s Corporation has acquired Bogard AB, a leading provider of data and information on politically exposed persons (PEPs) in the Nordic region. The acquisition advances Moody’s ability to help customers perform Know Your Customer (KYC) screening and research to address financial crime.

Bogard covers over 17,000 PEPs, relatives, and close associates across Sweden, Norway, Denmark, and Finland. The company collects, refines, and updates its data using various sources, including tax authorities, business and real estate registries, and other directories in the Nordic region.

The EU’s Fourth Money Laundering Directive entails an extension of the PEP concept, which now also covers domestic PEPs. This means that more resources are used for the activities affected by the law and that the importance of an efficient KYC process increases. With the help of Bogard’s practical experience of AML, Bogard has developed services that help customers in the Nordic market to easily and smoothly meet the requirements for PEP identification.

“Access to accurate, up-to-date information on politically exposed persons is vital for banks, corporations, and other market participants seeking to prevent money laundering and other forms of corruption,” said Keith Berry, General Manager of Moody’s KYC business unit. “Bogard’s sophisticated technology and local expertise further expands Moody’s integrated risk assessment capabilities to address financial crime, and deepens our presence in the region.”

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Rating Oligopoly Persists


“The EU requirements for providers of credit ratings have not broken the dominance of the three big agencies S&P, Moody’s and Fitch”, says a story published in Germany’s only stock exchange daily, Börsen-Zeitung. in Frankfurt on October 28, 2021. The author, Detlef Fechtner, reports on a speech deliverd by Steffen Kern, Chief Economist and Head of Risk Analysis at the EU’s financial market regulatory and supervisory authority ESMA, in Paris (France).

According to his presentation, the EU requirements for providers of credit ratings have not broken the dominance of the three big agencies S&P Global Ratings, Moody’s Investors Service and Fitch Ratings. “Hardly anything has changed in the past five years,” reported Steffen Kern on the occasion of the symposium of the Center for Financial Studies and the Institute for Banking and Financial History in cooperation with Moody’s. As Kern emphasized, “a more even distribution of market shares would be desirable”.

Kern recalled that the market share of the Big 3 – the two heavyweights S&P and Moody’s as well as number 3 Fitch by far – was 92% six years ago and is now 91%. The figures show that the many small rating agencies fail to put competitive pressure on the trio – despite regulatory support. The EU regulation from 2013 stipulates that issuers who have at least two ratings created should “consider” commissioning a small agency.

His findings show that there are apparently no market forces that would cause the leading agencies to be replaced. The often invoked “failure” of these rating agencies during the financial crisis did not lastingly break the trust in their judgments.

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S&P Global Ratings’ Revenue Increased 14%


S&P Global reported third quarter 2021 results with revenue of more than $ 2 billion, an increase of 13% compared to the same period last year.

  • Every segment was delivering revenue growth.
  • Net income increased 75% to $797 million.
  • Diluted earnings per share increased 75% to $3.30 primarily due to the debt tender premium and fees associated with the senior notes tender offer in the prior period.
  • Adjusted net income increased 24% to $855 million.
  • Adjusted diluted earnings per share increased 24% to $3.54 primarily due to very strong revenue growth.
  • The largest adjustments in the third quarter of 2021 were for costs related to the pending merger with IHS Markit and deal-related amortization related to previous acquisitions.

“The strong global economic growth, elevated M&A activity, strong stock markets, and increased volatility realized in the third quarter created a solid underpinning for our businesses. In this environment, S&P Global delivered an exceptional quarter of financial results as we continue to provide our customers with the essential intelligence they need to navigate rapidly changing markets,” said Douglas L. Peterson, President and Chief Executive Officer of S&P Global. “After delivering very strong results in a difficult 2020, we expect to meaningfully surpass those results in 2021.”

S&P Global continues to make progress on the merger with IHS Markit as the regulatory path to closing is becoming clearer:

  • The UK and European regulators have now announced their views on the transaction.
  • S&P Global and IHS Markit have committed to divest S&P Global’s CUSIP Global Services and Leveraged Commentary and Data, together with a related family of leveraged loan indices, as well as IHS Markit’s Oil Price Information Services (OPIS), Coal, Metals & Mining (CMM), PetroChem Wire, and Base Chemicals businesses.
  • Based on the regulatory feedback and these divestitures, the management now anticipates closing during the first quarter of 2022.

The Company’s operating profit margin increased 80 basis points to 51.9% due to higher incremental profits on additional revenue partially offset by merger-related costs. Adjusted operating profit margin increased 250 basis points to 55.4% primarily due to higher incremental profits on additional revenue.

During the third quarter, the Company returned $186 million to shareholders in dividends. There were no share repurchases during the quarter due to the pending merger with IHS Markit.

S&P Dow Jones Indices LLC

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S&P Global Ratings

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S&P Global Market Intelligence

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S&P Global Platts

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Rating Agency Violates Disclosure of Transparency Reports and More

Agencies, Authorities, Compliances, Registrations, Regulations

CRA Transparency Reports 2021

“Transparency Reports” of credit rating agencies (CRAs) are published in accordance with Article 12 and Annex I, Section E.III of the EU Regulation on Credit Rating Agencies:

  • (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies, as amended by Regulation
  • (EU) No 513/2011 of the European Parliament and of the Council of 11 May 2011 and as amended by Regulation
  • (EU) No. 462/2013 of the European Parliament and of the Council of 21 May, 2013.

Rating agencies are therefore obliged to disclose their transparency reports in order to enable everyone to obtain certainty about the functioning of the rating agency. Unfortunately, the reports are not always easy to find. Therefore, the following lists can be found with all links to the current reports.

In one case, the report cannot be found by normal search engines, but it is stored in such a way that the supervisory authority, the European Securities and Markets Authority (ESMA) can be shown a link which, however, is normally not found by internet users. The link to the missing report can be found in the following lists.

Missing transparency report

With one of the registered credit rating agency, however, there is a clear violation of the CRA Regulation in the European Union:

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There is a page that lists transparency reports, but all the links are broken and do not allow the alleged transparency reports to be downloaded. It makes no difference whether you search in German or in English. The mandatory reports are not available in neither German nor English. The violation relates not only to the most recent report, but also to previous years and other mandatory reports of the same credit rating agency. The reports, which are so important for investors and issuers, are permanently unavailable. The lack of reports is not due to temporary maintenance.

In this case it is again evident that the European supervisory authority is apparently working too slowly to punish such violations. The deficiency could be remedied by simply uploading the reports. It has been shown that it can sometimes take ESMA several years to punish a violation of the EU regulation on rating agencies. That is too late to allow market participants an up-to-date insight.

Incorrect file name

A leading American rating agency has its transparency reports ready with confusing labels. The “Transparency Report 2020” shows what is actually a transparency report for 2019. The right Transparency Report 2020 is also available, but in a different place and with a different link. This can lead to the erroneous use of this data in statistical evaluations. We have an example of this.

The following documentation proves the incorrect and misleading designations. Here is the wrong link first:

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The following links led to the correct files – with the one exception mentioned above – on Friday, September 17th, 2021:

Sorted alphabetically

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Sorted by country

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ESG Ratings: The Good, the Bad, the Ugly

Agencies, Methodologies

Headline ratings no longer enough

Prof. Dr. Nils Stieglitz gave a welcome address to the conference “ESG Ratings: The Good, the Bad, the Ugly” of the Corporate Governance Institute (Prof. Dr. Julia Redenius-Hövermann) at the Frankfurt School of Finance & Management, followed by Prof. Dr. Zacharias Sautner, showing data of Hartzmark and Sussman, 2019, proving that investors value sustainability. He introduces the subject “ESG Ratings in the Investment Process”.

“Corporate ESG ratings are the most unseful source of information”, says Zacharias Sautner. This is confirmed by various studies. ESG ratings provide data material to investment performance, supplement organization’s other research of corporate ESG performance/risk.

SustainAbility, an ERM Group company, is a think tank and advisory firm that works to inspire and enable business to lead the way to a sustainable economy. In 2010, SustainAbility undertook its first “Rate the Raters” project to better understand the environmental, social, and governance (ESG) ratings landscape and provide perspectives to help companies, investors and other stakeholders make sense of and derive more value from ESG ratings.

In general, investors recognize that ESG ratings and rankings are not going away any time soon. When
asked what changes and solutions they would like to see in the next five years the leading responses
from the survey were the following:

  • Improved quality and disclosure of methodology
  • Greater focus on relevant/material issues
  • Better linkage to company financial performance
  • Greater consistency and comparability across
  • rating methodologies
  • Greater engagement of rated companies in the
  • evaluation process
  • Consolidation of ratings

These expectations were reiterated in the interviews along with a desire for more timely coverage, more data, integration of ESG into financial reporting and the ability to evaluate corporate societal impact vs. just operational performance.

Dr. Florian Berg, Massachusetts Institute of Technology, spoke about the divergence of ESG ratings. Correlations of the varios raters’ ratings range from 38% to 71%. Based on data from six prominent rating agencies namely, KLD (MSCI Stats), Sustainalytics, Vigeo Eiris (Moody’s), RobecoSAM (S&P Global) the divergence into three sources. “We do not even know the truth, therefore we only can compare”, argues Florian Berg. “We describe ESG ratings in three elements.

  • Scope: which attributes are included?
  • Measuremaent: how ar e these attributes measured?
  • Weights: how are indicators aggreagted into one score?

Aggregation and mesurement are the biggest sources of differences. See Aggregate Confusion: The Divergence of ESG Ratings, 2019.

What are the implications for investors? According to Florian Berg, the following two tasks have to be accomplished: Clarify ESG preferences, scope and weights, and investors have to answer the question: What measurement methodology do you agree with most?

Ingo Speich, Head of Sustainability and Corporate Governance, Deka Investment, points to the fact that investors no longer look only at headline ratings, but dig deeply into the data. He outlines the problem that the regulator requires financial service providers to report on ESG criteria. However, the data required for this are not sufficiently reported by the companies concerned, so that the financial service providers are faced with the difficulty of collecting, processing and passing on this data.

Rating Agency Accused of Using Original, Then Rewritten Data

Agencies, Data

Refinitiv ESG’s rewriting not a one-time event

Prof. Dr. Kornelia Fabisik, Assistant Professor of Finance, Frankfurt School, reports on some discoveries at one of the ESG rating agencies at the conference “ESG Ratings: The Good, the Bad, the Ugly” of the Corporate Governance Institute (Prof. Dr. Julia Redenius-Hövermann) at the Frankfurt School of Finance & Management.

Refinitiv ESG is a key Environmental, Social, and Corporate Governance rating provider offering “one of the most comprehensive ESG databases in the industry”, and its ESG scores have been used (or referenced) in more than 1,500 academic articles since 2003. The scores were initially constructed by ASSET4, a company acquired in 2009 by Thomson Reuters, which became Refinitiv in 2018. Refinitiv ESG data are employed by major asset managers, such as BlackRock, to manage ESG-related investment risks.

“We document large rewriting of ESG ratings of Refinitiv ESG.” The same set of firm-year observations downloaded September 2018 and September 2020 provides evidence. For the full sample Kornelia Fabisik observerd a rewriting of 21% on average, 18 % median.

“Rewriting is not a one-time event”, warns Kornelia Fabisik. “Refinitv ESG continues to adjust the data ex-post, unannounced.”

“In April 2020, Refnitiv ESG changed the methodology used to determine the ratings.” There were two key changes: Treatment of boolean metrics and introduction of a propietary materiality matrix.

The ESG score deviations are related to firm characteristics, especially past stock returns. Firms that performed better in the past experienced rating upgrades. The ESG score deviations strongly affect the classification of firms into different ESG quantities.

“Has data rewriting stopped post methodology change? No,” ist the answer of Kornelia Fabisik, “the database changes on a weekly basis.” She shows concrete examples.

“ESG ratings industry follows an investor-pay model, whereby the data vendors compete on how useful their ratings are for ESG investments.”

“44% of carbon emission obsesrvations (Scope 1 CO2 emissions) have in some way been altered.” Specifically, 23.6% firm-years were added (i.e., data were missing in the 11/2019 download, but filled in for the 02/2021 download), 1.6% were deleted, and 18.4% were modified. The data rewriting affects all years and not just those closest to the end of the sample period.”

Prof. Dr. Kornelia Fabisik’s conclusions, as presented at the Frankfurt School conference:

  • The large differences in results that we document have implications for empirical test strategies using Refinitiv ESG data. Moving forward, researchers and investment professionals need to verify whether the original or rewritten ESG scores are needed to perform their tests.
  • For example, if the practitioners are unaware of the changes, asset managers could erroneously be benchmarked against the rewritten data that were unavailable at the time of portfolio formation (look-ahead bias).
  • She argues that the results reflect the incentive of the data provider to introduce a positive relationship between ESG scores and returns in the data, in order to demonstrate that their ESG scores are useful for data users developing ESG-related investing strategies.
  • Given that ESG research and ESG-related investment strategies are likely to grow even furhter, this is an important caveat for adhering to the status-quo.

Finance Working Paper N° 708/2020, August 2021, Abstract:

The explosion in ESG research has led to a strong reliance on ESG rating providers. The article documents widespread changes to the historical ratings of a key rating provider, Refinitiv ESG (formerly ASSET4). Depending on whether the original or rewritten data are used, ESG-based classifications of firms into ESG quantiles and tests that relate ESG scores to returns change. While there is a positive link between ESG scores and firms’ stock market performance in the rewritten data, the authors fail to observe such a relationship in the initial data. The ESG data rewriting is an ongoing rather than a one-off phenomenon.

ACRA partners with EDB and Armenia

Agencies, Authorities

Challenge of maintaining independence

The Analytical Credit Rating Agency, Eurasian Development Bank (EDB), and the Ministry of Finance of the Republic of Armenia have entered into a Memorandum of Understanding that establishes areas for cooperation between the aforementioned parties, the key goal of which is to stimulate economic growth in the Republic of Armenia and the Russian Federation. The document was signed by Minister of Finance of the Republic of Armenia Tigran Khachatryan, Chairman of the Management Board of EDB Nikolai Podguzov, and ACRA CEO Mikhail Sukhov.

The Memorandum, among other things, provides for the creation of conditions for assigning a sovereign credit rating to the Republic of Armenia, increasing the availability of rating services, and expanding the rating coverage of companies that are residents of the Armenian financial market. In addition, in accordance with the Memorandum, ACRA will assign ratings to bonds issued by Armenian issuers within the framework of projects involving the EDB. A separate area of partnership will be cooperation in the field of sustainable development in the Republic of Armenia, including through the use of green finance instruments.

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The obligation to register for rating agencies, which has now been implemented in almost all parts of the world, especially in Europe, America and Asia, has sparked an academic discussion as to whether a registration obligation already hijacks dependency relationships that could influence the independence and neutrality of the rating agency in its ratings. Through close partnership relationships, the rating agency becomes a virtual external department of ministries or banks. If the partnership is abandoned, this may have consequences for the rating agency, which could pose an existential threat to the agency.

“Using money from our Technical Assistance Fund, the EDB intends to allocate a grant on an irrevocable basis, at the expense of which ACRA will carry out actions to assign a sovereign rating to the Ministry of Finance of the Republic of Armenia. This will encourage the development of ties within the Eurasian Economic Union and with other EAEU member states and pave the way for providing rating services to companies that are residents of the Republic of Armenia and have an interest in entering the Russian financial market,” commented Chairman of the Management Board of EDB Nikolai Podguzov.

“Credit ratings are an integral part of the market economy and help ensure the formation of a stable financial market with a broad base of investors. Our cooperation with the Ministry of Finance of the Republic of Armenia and the EDB will contribute to unlocking investment potential and the expansion of trade and economic ties within the EAEU,” commented ACRA CEO Mikhail Sukhov.

Billion Dollar Brand Name Given Away

Advertising, Agencies, Consulting, Histories

Rework requested

Just a few years ago, a cereal was linguistically associated with Kellogg’s. Anyone who spoke of Kellogg’s in Germany thought of cornflakes and vice versa, anyone who thought of cornflakes would also think of Kellogg’s.

In the meantime, discount chains – from Germany for example – such as Aldi and Lidl have revolutionized the world of brands. Lidl in particular attacked the big brand names directly in a spectacular advertising campaign. In 2016, Lidl began to directly compare famous branded products with its own brands and explicitly give the customer the choice of choosing the more expensive branded product or a much cheaper comparable product. The customers have made the choice, some branded products are still around today, others have completely disappeared from the shelves.

Perhaps unnoticed by many, a brand name that had been known for decades in almost every American household and even worldwide – at least among bond issuers and professional investors – disappeared. The curious thing about this story is that the brand is still being talked about even though it no longer exists. Anyone looking for this company has to use an intelligent search engine that remembers the story and therefore directs to the right page. If you search under the old name among the official registrations, you will no longer find what you are looking for. The valuable brand name appears in a footnote at best.

For the company of a rating agency, the most valuable thing is its history. The ability to correctly forecast the solvency of companies and other bond issuers can only be demonstrated over a long period of time. Trust in a rating agency develops very slowly; in the case of the leading agencies, it developed over a century. Trust in the rating agency is inextricably linked to its name. Analysts and computer models can also be quickly bought by other agencies and put on the greenfield. However, the history and corporate culture of a credit rating agency cannot simply be reproduced and is therefore a valuable asset.

For supervisory authorities such as the European Securities and Markets Authority (ESMA) as well as for the European Central Bank (ECB), the history of a rating agency is of decisive importance for the recognition, be it as a registered or a certified credit rating agency. Renaming in the agency does not play a role for the purely legal recognition. However, expectations of market participants and users of credit ratings are associated with the age of the name.

If a rating agency abandons its name, it can continue to protect the abandoned trademark if necessary. From a purely legal point of view, the old brand name may still be protected, but economically it has been given away.

2016 was also a memorable year for the US rating agency Standard & Poor’s

Standard & Poor’s Corporation was an internationally known credit rating agency. It was created in 1941 from the merger of the American companies H.V. & H.W. Poor Co. and Standard Statistics Bureau. As an abbreviation, S&P quickly caught on. Until the 1970s, the agency’s business activities could be compared to a publishing house rather than to the research and credit departments of banks.

In the 1990s, almost all of the agency’s products were also offered on paper and not primarily electronically. A parent company like McGraw-Hill, which is itself a publishing group, fits such a “publishing company”. McGraw-Hill was an American publisher founded in 1909 and based in New York City, known for textbooks and school books and financial information services.

In 1959 they had sales of $ 100 million. In 1961 they took over F. W. Dodge Corporation (which had its focus on the construction industry) and in 1963 the Webster Publishing Company, with which they entered the market for textbooks for elementary schools and high schools, which they expanded in 1965 with the takeover of the California Test Bureau. With the takeover of Shepherd’s Citations in 1966, they moved into the field of legal books and with the takeover of Standard & Poor’s in the same year in the field of financial information services. In 2011 it was split into S&P Global and McGraw-Hill Education (taken over by Apollo Global Management in 2012).

5 years after the break-up of the group, the famous brand name finally came to an end. S&P Global had hired a global brand transformation company to develop a unified branding strategy: Landor, founded in 1941 by Walter Landor, who pioneered some research, design, and consulting methods that the branding industry still uses. Landor has also advised Coca-Cola and Kellogs.

Landor belongs to the WPP group of companies: WPP plc is a British multinational communications, advertising, public relations, technology, and commerce holding company headquartered in London, England. WPP’s brand consultancies Landor and FITCH have now grouped under one entity named “Landor & FITCH”. Since January 2019, FITCH has been part of the Landor family under new stewardship. FITCH should not be confused with rating agency Fitch Ratings.

While the consultancy itself kept its 1940s name, they recommended Standard & Poor’s to abandon the 1940s name. Landor was founded 1941, Standard & Poor’s formed in 1941. In 2016, the year in which the discounters started their massive attacks on the established brand names, the brand name Standard & Poor’s was abandoned, while Landor continued to use his famous name. The renaming took place at a time when the defense of brand names was particularly important.

The addition “global” is particularly old-fashioned and out of date: As early as the turn of the millennium, the internet economy made it clear that practically every company can claim to be globally active. Even the information that is held by the smallest companies is accessed worldwide, as the example of RATING EVIDENCE GmbH from Frankfurt am Main, Germany, shows. The map traces the countries from which the website was able to record visitors (as of September 4, 2021):

As the following retrieval from September 4, 2021 shows, the name “Standard & Poor’s” can no longer be found on the agency’s website itself in all documents since 2016. If you search for the old company name, you will find documents from 2015 or older:

The famous name of the rating agency is no longer written out anywhere. If the old documents are deleted one day, the name will even disappear entirely from their own website. Anyone looking for the name “Standard & Poor’s” will one day no longer find what they are looking for at the agency.

Although the internet has grown exponentially in the last 5 years and the number of information offers and bloggers has increased significantly, there are still many more sites that speak of “Standard & Poor’s” and not of “S&P Global Ratings”.

An estimate of how many pages the term “S&P Global Ratings” is used on can be determined using the Google search engine. In terms of search results, it must be taken into account that tens of thousands of pages have already been published by the rating agency itself and may be part of these search results.

Despite the dramatic growth of the Internet in the last few years, there are still more pages quoting “Standard & Poor’s” than “S&P Global Ratings”. Anyone who thinks that these are just old pages that have not yet been updated can be convinced of the opposite:

The agency is also still listed under its old name in the popular Internet reference works:

Google Scholar provides a simple way to broadly search for scholarly literature. Search across a wide variety of disciplines and sources: articles, theses, books and so on. Students and scientists from all over the world use this database. Here, too, it becomes very clear how the attempt to establish the new brand name has failed:

Standard & Poor’s is one of the few companies that has made a name for itself in school textbooks. Anyone who studies investment and finance at one of the business schools will sooner or later hear from the credit rating agencies and, among them, in particular from the two market leaders Moody’s Investors Service and Standard & Poor’s. In the United States, the CFA Institute is one of the most important educational institutions beyond the business schools. The CFA Institute plays a role similar to that of the German Association for Financial Analysis and Asset Management in Germany. The CFA Institute is a leading organization for the investment profession globally by promoting the highest standards of ethics, education, and professional excellence for the ultimate benefit of society. There can hardly be a greater honor for a rating agency than being a name that is part of the examination knowledge for professionals, the knowledge relevant to the exam for professional competence.

Even this important institution did not get the name change. All documents on the website can only be found under the old name “Standard & Poor’s”, but not under the new name “S&P Global Ratings”:

All of this leads to a sober balance: the rebranding has not been successful in the last 5 years. As has already been shown earlier, there is no mention of the new name even in specialist circles. For companies like Apple or Coca-Cola it is clear that the brand name is a valuable part of the company.

Who would think of renaming Coca-Cola to “CC Global Drink”?

The following world map of “Google Trends” shows in which countries Standard and Poor’s was searched for for the last 12 months up to September 4, 2021. Such a map can only be displayed on Google Trends if a sufficiently high number of search queries have been registered. The world map speaks a clear language, because it shows that many Internet users still make the effort to type in the long company name “Standard & Poor’s” into the search engine in order to find the rating agency. Judging by the number of search queries, the renaming does not seem to have arrived in these countries in particular: Germany, Sweden, Portugal, Switzerland, and United Kingdom.

A famous and traditional brand name became a senseless combination of letters and words. If the name “Standard & Poor’s” is no longer used anywhere and is not cultivated as a brand, it is completely forgotten where the name came from. With the renaming without history, the memories of the story also end. In this credit rating business in particular, it is all about showing off many years of experience and expertise.

The credit rating agencies have gone through many ups and downs over the decades of their activity. In the dot-com bubble, promises made by companies that promised new markets and “a new economy” were lightly believed. In the global financial crises, rating agencies were blamed for overly optimistic ratings. All of these events left deep wounds that have long healed. Hence there is no need to give up a good name for a “letter salad”.

With the keywords: “Would you like your ratings poor, standard or OK?Willem Okkerse went on business trips about the risks of AEX listed companies. Even these puns by the deceased rating expert could do no harm in the brand name.

The rating agency “Standard & Poor’s” had demonstrated that it could learn from mistakes and draw conclusions. The undesirable developments were cracked down on. The rating agencies were subjected to even stricter regulation in the USA and comprehensive legal control in Europe. Laws have also been passed in Africa and Asia which give rating agencies a special status in many countries.

The services of a rating agency are not like an app from an “AppStore” that was only invented a few years ago, in 2007. In the dynamic environment of apps and webs, name changes may correspond to changed user needs in quick succession. The strength of the leading agencies lies in the fact that they have used comparable rating symbols and scales for decades, which promise comparability and continuity. The renaming of the agency did not reflect the nature of the agency’s activities.

Four businesses unite as one financial powerhouse“: The renaming appears to follow from a disregard for the meaning of names. A name always stands for visions and demands on the future. If you chop up the name beyond recognition, you also violate the identity of the company. The names “S&P Global Market Intelligence”, “S&P Global Ratings”, “S&P Dow Jones Indices” and “S&P Global Platts” suggest a comparability of the diverse activities, which is not given in reality. On the one hand there are companies that provide factual market information, on the other hand there is a rating agency that draws up analysts’ opinions.

Again questions arise about the brand names

Recent corporate development events raise the question of how the corporate group’s branding should be structured. The experiences from the unsuccessful relaunch of 2016 must be taken into account. Brand names alone can be worth billions. To destroy a brand name means to destroy value for the owners. The owners of the brand names do not sit in the consulting firms, but in the general meetings of the shareholders.

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Standard & Poor’s. But “S&P Global Ratings”, Who?

Advertising, Agencies, Marketing

Standard & Poor’s gave away a strong name

“Landor announced that it has provided brand strategy and design services to McGraw Hill Financial for the company’s bold new brand identity as S&P Global. Landor partnered with the company to create a new name and design system that confidently marks S&P Global as the leader in delivering essential intelligence to companies, governments, and individuals.” The press release of May 3, 2016 introduced the text about the rebranding. What about the acceptance of the new brand name five years later?

Despite owning Standard & Poor’s, the S&P 500, the Dow Jones Index, and Platts – some of the most iconic benchmarks and market intelligence brands in the world – McGraw Hill Financial (MHFI) was commonly perceived as a textbook publisher. With a clearly established business strategy, Landor helped MHFI “define its true value and claim its unique position in the market. As S&P Global, the brand tells a new story and opens an auspicious chapter in its impressive history.”

Founded by Walter Landor in 1941 and today a global leader in brand consulting and design, Landor helps clients create agile brands that thrive in today’s dynamic, disruptive marketplace. Their work shall enable top brands—from Barclays to BMW and Tide to Taj – “to stand for something while never standing still”.

Benchmarks and essential intelligence form the backbone of the financial ecosystem, with credit ratings and indices constantly referenced to bring context and clarity to investment decisions. Landor focused the new brand on the pivotal role S&P Global plays as the common denominator in the world of finance, providing this essential intelligence to investors.

There was a sophisticated argument behind the renaming of the group of companies. In practice, however, the new company name is still a long way from establishing itself. For the credit rating agency in particular, S&P is still struggling globally to enforce the new name, even though it is actually to be used in a legally binding manner. The rating agency is regulated in many jurisdictions around the globe.

Ratings and rating agencies are quoted by many issuers and named on their websites. Here are some examples of how the agency’s new name is still ignored after half a decade (access to all of the websites below from September 3, 2021):



Deutsche Lufthansa

Fnac Darty 


Merck KGaA






The selection of these issuers was purely random, regarding the question of how S&P Global Ratings is presented. In the sample, none of the issuers gave correct information about the agencies by which they were assessed. All of them used the old name and not the new brand identity developed by Landor.

The European issuers would actually be obliged to name the credit rating agency correctly, as the rating agency is subject to regulation by the European Securities and Markets Authority (ESMA). The correct name of the European subsidiary of the US rating agency is not “Standard & Poor’s”, but “S&P Global Ratings Europe Limited“.

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Moody’s Work with Revenue Grid

Advertising, Agencies, Procedures, Technology

Revenue Grid, a Mountainview, California-based revenue platform, raised $20 million in Series A funding. “800,000 sales pros use Revenue Grid to win faster and with more confidence”, says the website. The company is proud to have Moody’s as a customer.

W3 Capital led the round and was joined by investors including ICU Ventures. W3 Capital is a family owned Private Equity investor seeking partnerships with other founder and family owned companies, facilitating ownership transition and enabling management teams to lead their businesses into the future. W3Capital seeks control investments.

Revenue Signals are contextual, actionable notifications that tell a whole sales org what is going well or poorly throughout the whole sales process. These alerts and notifications are called “Signals”, because they are designed to signal the sales team about the next best step they should take now, or about anything that doesn’t go according to plan in the pipeline, process, or performance. They are the driving force behind guided selling because they give sales teams an instrument to remove guesswork, control each point in the sales process, and set a unified sales approach.

Pipeline visibility provides understanding into the actual state of the sales pipeline at any particular moment. For sales leadership, it means being able to track key deals, numbers, and thresholds in real time, and understanding why the situation is the way it is and where to move to get to the numbers a company needs.

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Which Rating Agencies the World is Looking for in Germany


Some surprising observations

Many Internet users do not bother to memorize the exact domain of a website, but simply enter a clear keyword into the Google search engine in order to be able to simply click on the desired result and visit the desired website. The displayed search results are therefore of great importance for the impression that a user receives from the respective rating agency.

As reported in an earlier post (“The Only Credit Rating Agency Recognized by BaFin“), an agency recognized by the European Securities and Markets Authority (ESMA) uses this function in order to present itself with a unique differentiating feature from all other agencies, namely with recognition by the German Federal Financial Supervisory Authority (BaFin). The catch is that BaFin has not been responsible for overseeing rating agencies for almost a decade, since 2012. Today, BaFin no longer gives its own recognition to rating agencies, which the rating agencies would allow to refer to in their advertising. The key to the rating business is the authorization according to the EU regulation.

Against the background of the ban on advertising with BaFin’s recognitions, the question arises of what significance the search results have in practice. How often could it happen that people are misled due to incorrect information in the search results? How often are rating agencies searched for that give false information?

Since search engines such as Google display their search results depending on the location, it must be taken into account that Google will most likely display rating agencies in the search results that are located in the vicinity or at least in the country of the searcher.

Only the following registered credit rating agencies are based in Germany:

Name of Credit Rating AgencyRegistered
Scope Hamburg GmbH (previously Euler Hermes Rating GmbH)2010
Creditreform Rating AG2011
Scope Ratings GmbH (previously Scope Ratings AG and PSR Rating GmbH)2011
GBB-Rating Gesellschaft für Bonitätsbeurteilung GmbH2011
ASSEKURATA Assekuranz Rating-Agentur GmbH2011
Moody’s Deutschland GmbH2011
Rating-Agentur Expert RA GmbH2015
DBRS Ratings GmbH2018
Source: European Securities and Markets Authority (ESMA), last updated list of May 7, 2021

Further below are the results from Google Trends, shown by snippets of screenshots. The information was accessed on August 27, 2021 on Google Trends. For the assumptions, requirements and interpretation of these results, please refer to their website.

Google Trends provides access to a largely unfiltered sample of actual search requests made to Google. It’s anonymized (no one is personally identified), categorized (determining the topic for a search query) and aggregated (grouped together). This allows Google to display interest in a particular topic from around the globe or down to city-level geography.

Here are a few notes on the study design:

  • The searches here were carried out with the shortest possible search term that unmistakably leads to the respective rating agency. For example, if you enter the word “Assekurata“, the rating agency you are looking for is already at the top of Google’s search results. “ASSEKURATA Assekuranz Rating-Agentur GmbH” is the correct full name of the agency. However, it can be assumed that most users do not bother to type in the full name including the legal form (“GmbH”), but are content with the word “Assekurata“. By the way, that is also the website’s domain name,
  • Entering the word “Creditreform” does not land you directly on the website of the rating agency, “Creditreform Rating AG“, but on the website of the group of companies to which the agency belongs. In addition, there are no other confusing results among the first search results. All search results for the keyword Creditreform lead to the right group of companies.
  • But if you search for the word “Scope”, you will likely get a translation of the word or a lexicon entry for “scope”. Who searches for this word “scope”, often searches for the following words as well, writes Google: Vortex, Scope statement, Zoom lens, C-Programming language, Carbon dioxide, and more. All of these search terms are not at all related to the EU-registered credit rating agencies in Berlin and Hamburg. Only those who want to be sure to find one of these rating agencies will find it under the following entries: “Scope Ratings” or “Scope Hamburg“. It is therefore imperative to add the word “Ratings” or, in the case of the Hamburg-based agency, to add the word “Hamburg”.

The more German federal states are marked in a shade of blue and the darker the blue, the more inquiries Google was able to record.

ASSEKURATA Assekuranz Rating-Agentur

12 months as of August 27, 2021. Klick on it for update!

Creditreform Rating

12 months as of August 27, 2021. Klick on it for update!

DBRS Ratings

12 months as of August 27, 2021. Klick on it for update!

GBB-Rating Gesellschaft für Bonitätsbeurteilung

12 months as of August 27, 2021. Klick on it for update!

Moody’s Deutschland

12 months as of August 27, 2021. Klick on it for update!

Rating-Agentur Expert RA

12 months as of August 27, 2021. Klick on it for update!

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Interest in rating agencies from all over Germany

As the figures show, there is keen interest in most rating agencies domiciled in Germany. So these rating agencies are searched again and again: Assekurata, Creditreform, DBRS, and, last not least, Moody’s. It also shows that the important financial centers in Germany are obviously relevant for the number of searches for these agencies. The city of the headquarters of the rating agency also seems to play a role, as does the industry or international orientation.

It should be emphasized once again that the searches are only made for those agencies that are also based in Germany. Rating agencies such as S&P Global Ratings or Fitch Ratings, which also have offices in Germany, but rather have their registered company domiciled in another country, are not taken into account. This search restriction is not associated with any judgement of the services provided by these agencies, but serves better comparability of the search results.

On the basis of the evidence shown above, the following hypotheses could be discussed:

  • Assekurata is based – and therefore searched there – at the insurance location Cologne, but is also wanted in the financial center of Frankfurt.
  • Creditreform is sought after all over Germany, as the company group also enjoys a reputation as an information bureau or credit agency.
  • In the case of DBRS, the connection to Morningstar and the fund rating might have led to a high number of searches.
  • With its international reputation as a US market leader, Moody’s is sought in the internationally important financial centers of Germany.

Now, however, the question arises why there are not a lot of search queries to be observed with the other agencies that would allow Google Trends an overview of the whole of Germany with blue coloring. Why do these agencies find less interest? The following facts and assumptions can be put together for this purpose. However, these can only help to understand the results, but cannot replace more detailed investigations.

The financial services industry specialist

As an independent European rating agency, GBB-Rating offers clients a portfolio of services encompassing rating, risk analysis, scoring and benchmarking. GBB-Rating’s credit assessments focus on banks, building societies and leasing companies. GBB-Rating is a subsidiary of Prüfungsverband deutscher Banken e.V. (Auditing Association of German Banks).

As an independent credit rating agency registered with the European Securities and Markets Authority (ESMA), every year it analyzes the credit standing of private commercial banks in Germany and numerous European institutions. Since 2012 the ratings produced by GBB-Rating have been one of the factors used to calculate the contributions payable by the banks to Entschädigungseinrichtung deutscher Banken GmbH (EdB), the subsidiary of the Association of German Banks that guarantees savers’ deposits.

Most of the ratings from this agency are not published at all, but rather communicated directly to the banks assessed. The rating is primarily important for the relationship between banks and the deposit guarantee system.

The Compensation Scheme of German Private Banks (EdB) was entrusted by the German Federal Finance Ministry with the task of running the statutory deposit guarantee and investor compensation scheme for the private banks in Germany. The EdB’s job is to compensate the creditors of a bank assigned to it where the bank is unable to repay deposits. Liabilities arising from securities transactions conducted by a credit institution (i.e. bank) as defined in the EU Capital Requirements Regulation (CRR) are also deemed to be deposits.

Comparatively few experts are concerned with these very special questions. They are also supplied directly by the rating agency via distribution lists. An explanation for the low search volume on Google might be sought in these circumstances.

The continental specialist with roots in Russia

Rating-Agentur Expert RA GmbH is the legal entity of RAEX-Europe, affiliated with the international group RAEX. The group has more than 20 years of experience in rating and analytical industry. RAEX-Europe assigns classic credit ratings according to the international scale as well as non-credit ESG ratings (environmental, social & governance). In December 2018 together with the leading Chinese rating agency CCXI, the Pakistani VIS Group and the Islamic rating agency IIRA, RAEX-Europe signed a memorandum dedicated to the preparation and publication of analytical products for the Silk Road countries.

The agency doesn’t even run a German website. Their orientation is international and the domiciliation in Germany is a decision for Germany as a location in the European Union, since EU-registered rating agencies must have a seat in the European Union. The services of this rating agency are aimed at a special professional audience such as those with interests in the post-Soviet states.

The all-rounder with a claim to market leadership

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The Graveyard of Authorized Credit Rating Agencies in the European Union

Agencies, Authorities, Certifications, Registrations

Rating agencies have been registered in the European Union since 2010 in order to operate in accordance with the EU regulation on rating agencies of 2009 (CRAR). Dozens of agencies have therefore made use of the option, but also the obligation, to register or get certified. Rating agencies are only allowed to operate in the European Union after authorization, namely registration or certification.

A public list is kept at the European Securities and Markets Authority (ESMA) on the registered or certified agencies. This list is an important reference for all market participants in order to find out about the approved agencies.

In order to make it easy to find it, the list of authorized credit rating agencies was linked e.g. from the website from the beginning. Since 1998, long before the word “blog” found its way into the German language, the website has been dealing with credit rating issues and the statutory or voluntary regulation and self-regulation of credit rating agencies.

It is less well known that a number of rating agencies have now returned their licenses. The return of licenses was particularly evident through brexit, when all those rating agencies that are based in Great Britain and were registered there could no longer be recognized by ESMA.

The following is a complete list of 16 de-registered or de-certified credit rating agencies as of May 7, 2021:

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Credit Rating Agency Authorisation 2021

Agencies, Authorities, Certifications, Registrations

Links to websites of the Credit Rating Agencies authorized in the European Union.

The credit rating agencies listed below have been registered or certified by the European Securities and Markets Authority (ESMA) in accordance with the Credit Rating Agencies Regulation. Domains of websites are added. According to ESMA, the list was last updated on May 7, 2021.

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GlobalCapital Celebrates KBRA


2021 Securitization Awards.

Kroll Bond Rating Agency (KBRA), a global full-service rating agency, was named “Securitization Rating Agency of the Year” by GlobalCapital at its U.S. Securitization Awards 2021.

“KBRA was founded in 2010 to set a standard of excellence and integrity, and we have been loyal to this notion since then,” Eric Thompson, Global Head of Structured Finance at KBRA, said. “It is an honor to be recognized by key market participants as the Securitization Rating Agency of the Year, proving that our founding principles and innovative approach have led us here. I’m proud to be part of a company that focuses on providing best-in-class service to investors—a common goal shared across all sectors.”

In 2011, KBRA issued its first rating in the CMBS sector. The company’s Structured Finance Group has since rated over 2,000 transactions. KBRA considers itself also a thought leader for its unique environmental, social, and governance (ESG) approach, setting them apart in the credit rating agency space.

“We look forward to continuing our engagement with the market and providing comprehensive, timely analysis,” Thompson said.

action ball field game

Kickers Don’t Hit


URA Research GmbH is once again coming up with new insights into bonds.

After reviewing and analyzing the financial reports published in 2021, the URA ratings for 13 bonds were confirmed. For 2 bonds (FC Schalke 04 III and Katjes III) the assessment has deteriorated. The 4th bond from Schalke 04 and the 1st bond from Werder Bremen were newly included in the URA monitoring. In the case of follow-up bonds, the coupon usually falls due to the overall lower interest rate level.

“External ratings have almost not been obtained for a long time,” writes Jens Höhl, Managing Director of URA Research GmbH. When his company started as URA Unternehmens Ratingagentur AG in 1997, the prospects for external ratings on the bond markets in Germany were still different. While competitors continued and are now embroiled in scandals such as at the Greensill Bank, the URA wisely withdrew from this business of publishing credit ratings years ago and has since been working as a specialist with the company “URA Research GmbH“.

“Because of the frequent private placements, fewer and fewer securities prospectuses are published. At least the bond conditions improve in individual cases “, Jens Höhl continues, and at least there is no deterioration overall: e.g. obligation to publish financial reports after a certain period of time, sometimes also linked to interest rate step-ups, or limitation of financial debt or minimum equity ratio, involvement of trustees, e.g. for bonds based on the Nordic bond format.

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Ernst & Young No Longer Has any Equity on its Balance Sheet


Auditors have been making double-digit million losses for years.

At Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft (EY) in Germany, “equity” is on the assets side, namely as a “deficit not covered by equity” in the amount of € 62,715,000. The provisions, liabilities, deferred income as well as deferred taxes and fiduciary obligations exceed the company’s assets by an eight-digit amount in euros within a year. Receivables against this company are therefore no longer fully covered by assets on the balance sheet.

The trend line that had to be shown here for equity and equity ratio for EY on March 3, 2021, continues as expected. According to the consolidated financial statements and group management report as of June 30, 2020 of the Stuttgart-based parent company, the company no longer has any equity. Turnover was weaker than that of the other large auditors in Germany.

Under the chairman of the supervisory board, Georg Graf Waldersee, the German company has only made losses for years. This is also the case in the current reporting period. In the consolidated income statement for the financial year from 07/01/2019 to 06/30/2020, the consolidated net loss for the year is stated at € 49,608,000.

The billions in damages from the Wirecard scandal are not included: “In connection with the Wirecard case before and after the balance sheet date, claimants attempted to assert civil claims against us with out-of-court letters. On June 30, 2020, we were served complaints from investors that were judged to be unfounded both internally and by the law firms commissioned to defend us.”

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The Role of Ratings in Greenwashing

Agencies, Criteria, Read

Austria’s Financial Market Authority (FMA) warns consumers against “greenwashing” in the new edition of their consumer information series “Let’s talk about money”.

“Greenwashing” means that a financial product is advertised as environmentally friendly, green or sustainable – i.e. colored green – even though it does not actually meet these standards. In this way, potential investors are to be tempted to make investments that they would not have made or would only have made at a different price with knowledge of the actual effects of the financial product.

“Greenwashing” is carried out in particular through misleading or false information in advertising, consultations and product documentation. It is often associated with a corresponding optical design, for example through the use of the color green and through representations of unspoiled nature.

Furthermore, terms such as “ecological” or “green” are often used, or a certification that does not even exist is advertised, reports the FMA. The FMA report could be supplemented by a warning about sustainability ratings that were either developed in a fast-track process and thus ignoring a number of important aspects, or even applied without any technical expertise.

Environmental, Social, and Corporate Governance (ESG) refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business. Some rating agencies are providing investors with its ESG analysis through a digital platform, comprising more than 1,600 companies in the MSCI world stock market index. They claim to have methodology that is applicable to the whole universe of corporates, from small and medium-sized companies to large listed multinational enterprises.

Such claims are a clear indication that the complexity of the analysis is being underestimated, especially when a team of analysts who is only very small in relation to the number of companies assessed and overwhelmed by the size of the task is involved in the acquisition and evaluation of the data.

Therefore, investors should heed the regulatory warnings: “Sustainable investments are not per se safer than comparable conventional investments. Always ask questions and be critical,” warns the FMA Board of Directors, Helmut Ettl and Eduard Müller. Particular caution is required on the so-called “gray capital market”, that is, the unregulated capital market.

Investments in “green real estate”, wind and solar parks or hydropower plants are often offered in the “gray capital market”. If such projects are designed as qualified subordinated loans, company investments, bonds or profit participation rights, one should be aware that if the company becomes insolvent, all the money invested can be lost.

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Two Are On The Supervisory Board Of Greensill Bank. Then Why Scope Ratings And Not GBB-Rating?


A Complicated Choice Between Conflicts of Interest.

The rating of an independent credit rating agency is a valuable source of information also for the supervisory board of a company, especially for the supervisory board of a bank. The thoroughness of the analysis by credit rating analysts helps to understand the external view onto the company or onto the bank and to follow up on indications that work towards a deterioration in creditworthiness.

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Scope’s Greensill Bank Rating Tragedy

Agencies, Authorities, Governance, Read, Regulations

The Federal Financial Supervisory Authority (BaFin) filed criminal charges Against The Bank’s Board Members.

The Federal Financial Supervisory Authority (BaFin) in Germany received monthly reports from Greensill Bank AG (Greensill Bank) about the bank’s balance sheet data from January 2019 on. This is evident from the answer given by Parliamentary State Secretary Sarah Ryglewski on March 12, 2021 to written questions from members of the German Bundestag (Drucksache 19/27704). Greensill Bank’s total assets increased rapidly in 2019 from EUR 763 million at the beginning to EUR 3.8 billion.

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On March 3, 2021, BaFin finally issued a ban on the sale and payment of the bank due to the threat of over-indebtedness. The bank had to close for business with customers. BaFin prohibited it from accepting payments that were not intended to repay debts to the bank (moratorium). In addition, the BaFin filed criminal charges against the board members of Greensill Bank.

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Clever Commission from the City of Münster in Westphalia

Agencies, Analysts, Authorities, Experts

An automated safety net for municipal investments has not existed since 2017.

If municipalities do not want to set up extensive bond research departments themselves, in which financial analysts examine thousands of qualitative data and annual financial statements from issuers of financial products, the municipalities depend on the independent judgments of reliable credit rating agencies and specialists. The scandal of the Berlin rating agency Scope around the Greensill Bank in Bremen shows the billions in consequences of an embellished credit rating (see Börsen-Zeitung).

The city of Münster in Westphalia did not rely on the judgment of a rating agency registered in the European Union – the process in itself is a disgrace not only for the local rating agency Scope Ratings in Berlin, but also for the European Securities and Markets Authority in Paris, because far away in Paris are the supervisors, who already had internal compliance reports, transparency reports and notifications about the processes in Berlin. There was no lack of information.

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Relatives Are Relative

Agencies, Whistleblowing

The scandal with the Greensill Bank brings back earlier scandals by the same rating agency to mind.

How close can relationships be without being a problem for the rating and for the rating agency? What degree of kinship could influence the independence of judgment?

The story of the fund initiator Interlife Management GmbH seems like a penny dreadful: The company belonged to the father of the business scheme initiator and major shareholder of today’s Scope SE & Co. KGaA. Scope not only gave the first Interlife fund a good rating: A company owned by Scope manager Martin Passenheim took over sales. Ratings with a bitter aftertaste are not a recent phenomenon, but part of the gene code of this rating agency.

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human teeth

Scope Ratings Game of Corporate Law

Agencies, Authorities, Whistleblowing

The “Scope Group” is a bunch of constant changes under company law.

As a result of the Scope Ratings GmbH billion Euro scandal about Greensill Bank in Bermen, which was rated as “investment grade” for the first time in 2019 and is now insolvent, the precise activities of this local rating agency in Berlin have gained public attention. Therefore, the background to the recent Berlin takeover of Euler Hermes Rating GmbH (EHRG) is being researched.

The world-famous brand name “Euler Hermes” was not acquired by Scope. Even back then, when Scope took over FERI EuroRating Services AG, a credit rating agency registered by the European Securities and Markets Authority (ESMA) and headquartered in Bad Homburg, on August 1, 2016, Scope did not care about continuing the good name of the acquired credit rating agency.

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TELOS ESG Fund Check Professional Launched


An engine room of ESG fund management is in the making.

EccoWorks GmbH, known in Germany for their sustainability consulting, and the long-standing specialist for fund ratings in the institutional sector, TELOS GmbH, have bundled their know-how in the field of sustainability to develop an ESG fund rating product as part of a cooperation.

The “TELOS ESG Fund Check Professional” rating product developed in the course of the cooperation is supposed to support professional investors in finding suitable asset managers who are qualified in the field of sustainability. With the help of the ESG rating offered at fund level, institutional investors, for example, can gain confidence that the managers they hire have the necessary experience and qualifications to integrate ESG within the funds they offer.

With an innovative approach, the focus is on the “engine room of fund management” and rounded off by an analysis of the fund’s financial performance. “The integrated rating based on qualitative and quantitative factors as well as the addressing of institutional investors clearly distinguishes us from other ESG fund ratings on the market”, emphasizes Prof. Dr. Henry Schäfer, managing partner of EccoWorks GmbH.

The TELOS ESG Fund Check Professional aims at all asset classes, including liquid as well as illiquid assets. Areas of investigation are the integration of ESG criteria within the investment approach itself, among other things, quality management as well as the responsible fund manager or the team behind the fund and their embedding in networks. The knowledge gained in the rating process is summarized in a meaningful certificate and the rating (platinum / gold / silver …) is also summarized in a rating seal and thus made transparent to the market and thus to investors. The fund management also receives a strengths / weaknesses analysis.

With the TELOS ESG Fund Check Professional, the two partners also want to build a bridge between asset managers and professional investors.

Secured Income by Securing Deposits

Agencies, Clients, Regulations

The system of deposit insurance in the private banking industry makes GBB-Rating almost indispensable.

Cologne-based GBB-Rating, a company of the Auditing Association of German Banks, offers credit ratings with a price / performance ratio challenging its US peers. It is approved by the European Supervisory Authorities (ESAs) as an External Credit Assessment Institution (ECAI) for commissioned and unsolicited ratings for the calculation of capital requirements according to BASEL III / IV, CRR and Solvency II Directive. GBB-Rating is supervised by the European Securities and Markets Authority (ESMA) in Paris, which is responsible for all credit rating agencies in the European Union (EU).

The following graphic shows how GBB-Rating (i.e. GBB-Rating Gesellschaft für Bonitätsbeurteilung mbH) is embedded in the relationships between the associations and their subsidiaries:

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The following graph shows active relations and historic relations of managing directors, authorized officers, shareholders and the number of ative or historic relations to other companies:

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Since 1996, GBB-Rating has been active on the German market and increasingly also internationally in other European countries for ratings and credit assessments. With more than 20 rating analysts and around 220 ratings and benchmarking of financial services institutions every year, GBB-Rating is one of the local agencies in Germany and Europe. In the 2018 financial year, an average of 35 employees – excluding managing directors – were employed. The focus of their work is in the financial services sector with particular expertise in assessing banks, building societies and leasing companies. They have also been offering Pfandbrief ratings since 2020.

Assigned ratings and rating reports provide a decision-making basis for management and shareholders, a strengths / weaknesses analysis as a basis for determining the position, starting points for improving opportunity / risk management and monitoring the success and risk factors. The credit rating serves as a negotiating argument for business and refinancing partners as well as an image-promoting marketing tool.

Medium-sized and smaller leasing companies in particular can benefit from a recognized rating when opening up new sources of refinancing at credit institutions and, if necessary, realize advantages or savings potential in the (future) calculation of equity requirements (“leasing risk weight”) through more favorable risk weights.

GBB-Rating offers many years of expertise in the development, backtesting and validation of risk classification procedures (scoring) and data analysis and methodological support for risk management.

Among their services are:

  • Credit assessments: Drawing on many years of experience, detailed knowledge of the relevant processes and risk systems within enterprises, and of clients’ industry and company-specific requirements, GBB-Rating has originated a series of customized rating procedures. Credit assessments focus on banks, building societies, leasing companies and SMEs.
  • Review and validation of risk classifications: The independent support in the review of rating and scoring models in accordance with the requirements for risk classification procedures (MaRisk AT 4.1), quantitative and qualitative validation of the stability, selectivity and failure probability of the models and processes used.
  • Development of risk classification procedures: Development and implementation of individually optimized score cards and rating models as part of risk classification procedures in accordance with MaRisk BTO 1.4.
  • Data analysis: Well-founded portfolio and benchmark analyzes to support decision-making, implementation of various data analyzes to increase transparency and to optimize overall bank management
  • Technical support for risk management: The GBB platform is a tailor-made system solution for optimized information, credit management and credit assessment processes.
  • Service provider for deposit insurance schemes: In addition to designing and supporting the implementation of risk-based contribution systems, GBB also offers backtesting and validation. The design of early warning indicators (e.g. traffic light system, stress tests, reporting, benchmarking) is also one of their areas of responsibility.

Funds are maintained by the banks in such a way that all banks belonging to the deposit protection fund pay in a certain amount annually. The contribution to be made by each bank depends on the company’s turnover and creditworthiness. In Germany, GBB-Rating is commissioned to assess the risk in the private deposit insurance fund. In the statutory deposit insurance scheme, regulatory ratios and external ratings are used as scalar factors.

The voluntary deposit protection fund of the Federal Association of German Banks was founded in 1976 and today exists alongside the statutory compensation scheme of German banks that has existed since 1998.

With the voluntary security fund of the private banks, there was a security limit until December 31, 2014, which is 30% of the relevant liable equity of the respective bank per creditor. In the case of a bank’s liable equity capital of, for example, 100 million euros, the assets of each individual customer are secured with up to 30 million euros, provided the fund has the appropriate funds. The protection limit will be gradually reduced: From January 1, 2015, the protection limit per creditor will be 20%, from January 1, 2020 initially 15% and from January 1, 2025 then 8.75% of the bank’s liable equity capital, which is relevant for deposit protection.

It is crucial for bank customers that banks must inform their customers before opening an account whether or not they belong to the deposit protection fund, Section 23a of the German Banking Act. Today this query can also be carried out online at the Association of German Banks.

The protection of the voluntary deposit protection fund begins where the statutory protection of the compensation scheme of German banks ends. In the event of the insolvency of a participating institution, the deposit protection fund takes over the parts of the deposit that exceed the EUR 100,000 limit up to the respective protection limit.

luck technology travel time

First Crypto Fund Ratings in Germany

Agencies, Assets, Methodologies

TELOS GmbH, known for their fund ratings in the institutional sector, and DLC Distributed Ledger Consulting GmbH announce a strategic cooperation in the field of crypto fund ratings.

The aim of the cooperation is to connect two worlds – that of classic asset management and that of digital asset management. On the one hand, the partners want to create more transparency in the crypto market, which is still new and relatively unknown for institutional investors. On the other hand, the qualitative rating should give investors security about the know-how of the fund providers in the management of this asset class.

“In the first step, crypto values ​​such as Bitcoin or Ether will probably find their way into multi-asset strategies, after the inclusion of illiquid assets, among other things, one can speak of ‘multi-asset 4.0’. Many investors are already indirectly already today invests in Bitcoin without knowing it – for example, if they hold shares of Tesla, MicroStrategy or the parent company of Twitter, Square, in their portfolio “, says Alexander Scholz, Managing Director of TELOS GmbH.

The expertise of TELOS as an established rating agency, even in complex fund products, and the in-depth expert knowledge in the field of crypto assets from DLC Distributed Ledger Consulting should complement each other: “We take on the role of technical specialists in the cooperation and also advise on innovative incentive models for digital assets. Specifically, for example, we carry out smart contract audits of the tokens in a fund and in this way significantly increase security for the respective asset manager and, of course, the investor,” says Dr. Sven Hildebrandt, who was employed by a capital management company before DLC was founded.

Both cooperation partners assume that the universe of crypto funds, which is attractive for institutional investors, will increase exponentially. As market participants understand the asset class and its attractiveness in the overall portfolio context (correlation effects, improvement of the Sharpe ratio), questions about practical portfolio implementation and risk management will come to the fore, especially when choosing the right investment product and asset manager.

focal point photo string of violin

How to Celebrate Best Asset Manager Ratings


Firstfive AG is Germany’s leading rating agency for assessing asset managers in wealth management.

The best asset managers are honored annually. Based on the Sharpe ratio, i.e. the risk-adjusted performance, the results from three risk classes are combined using a score. The best Sharpe ratio receives 33.33 points and is the benchmark for the following places. They receive points according to the percentage of the top result achieved. The winner is the bank / asset management company with the highest total number of points (out of a maximum of 100). The winner must show outstanding performance in three different investment strategies.

For three evaluation periods, firstfive AG honored the best asset management companies in a digital ceremony in the Villa Bonn in Frankfurt am Main. Despite the pandemic, the award ceremony took place again in a dignified setting, which is a good contrast to video conferences and webinars. The recording of the gala event was broadcast live on February 22nd, 2021 and is available here as video.

The winner in the 12-month rating is Rhein Asset Management S.A. The top placement in the 3- and 5-year rankings is again occupied by ODDO BHF Trust GmbH, which with a total of 3 podium places – as in the previous year – also achieved the best overall result of all participants. The best asset management companies have to show top performance in three different risk classes in order to achieve top positions. This demanding task gives the firstfive Awards a particularly high priority.

“Our evaluations are made on the basis of real depots. The firstfive AG database of around 180 depots is unique and we distinguish ourselves from performance projects or depot contests from other institutions not be identical”, emphasizes Jürgen Lampe, CEO of firstfive AG.

The award-winning duo Liisa Randalu (viola) and Erik Schumann (violin) provided top-class accompanying chamber music. The members of the Schumann Quartet played Duetto No. 2 by F.A. Hoffmeister in C major and songs by Franz Schubert, including the Erlkönig.

Another highlight was the tasting of award-winning St. Kilian whiskeys from Germany’s largest distillery, in which the digital guests were able to participate in real life thanks to samples sent in advance. Not the risk / return ratio but look, smell, taste and run down are the evaluation criteria for a whiskey. Mr. Andreas Thümmler, founder and managing director of St. Kilian Distillers GmbH, explained the pot still process for the production of single malt whiskey according to Scottish tradition. He also showed investment opportunities in premium whiskey with exceptional return opportunities, which you can look at again here.

This year in the 12 month rating, Rhein Asset Management S.A. was just ahead of the game. 1st and 2nd place in the dynamic risk classes and a good 6th place in the balanced class were enough for the Luxembourgers to win the overall ranking. Mainly technology stocks from the USA made above-average performance contributions. Volksbank Kraichgau eG had to be content with second place, just beaten. With a slightly larger gap, ODDO BHF Trust GmbH reached 3rd place

Results overview – 12 months

  1. Rhein Asset Management S.A., Wasserbillig [81.2 pts.]
  2. Volksbank Kraichgau eG, Wiesloch. [79.8 pts.]
  3. ODDO BHF Trust GmbH, Frankfurt a. M. [68.1 pts.]
  4. LIQID Asset Management GmbH, Berlin [52.0 points]
  5. DJE Kapital AG, Pullach [47.2 pts.]

“We are very happy about the award for first place in the 1-year ranking in this very moving and demanding year 2020! The pandemic with all its effects presented us with unforeseen challenges in the past year. It is precisely in such phases that we as asset managers need keeping a cool head and making intelligent decisions. We are all the more proud that we were able to increase the assets entrusted to us by our clients even in this difficult phase. The early identification of global trends in connection with our risk-adjusted strategy was again the basis of our success”, said Mark Bügers, Managing Partner, Rhein Asset Management S.A.

“The second place in the 3-year rating and 3rd place in the 5-year rating also show that our investment strategy is sustainable and successful regardless of short-term market trends”, continued Bügers. “The Covid-19 crisis in particular has strengthened our investment process once again. The selection of stocks that benefit from global growth issues and meet our criteria is the foundation of our philosophy. At this point, it is particularly important to us to thank our customers for their loyalty and trust.”

In the 3-year ranking, top placements in the moderately dynamic and dynamic class gave ODDO BHF Trust GmbH 1st place with a clear lead. Rhein Asset Management S.A. took second place, followed by Hauck & Aufhäuser Privatbankiers AG.

Von links: Jürgen Lampe (firstfive), Tilo Wannow (Oddo BHF Trust), Mark Bügers (Rhein Asset Management), Prof. Jan Viebig (Oddo BHF Trust), Antje Erhard [Fotomontage firstfive AG]

Results overview – 36 months

  1. ODDO BHF Trust GmbH, Frankfurt a. M. [97.4 pts.]
  2. Rhein Asset Management S.A., Wasserbillig [85.7 pts.]
  3. Hauck & Aufhäuser Privatbankiers AG, Frankfurt a.M. [76.2 points]
  4. LIQID Asset Management GmbH, Berlin [70.0 points]
  5. Hypo Tirol Bank AG, Innsbruck. [69.0 pts.]

In the supreme discipline, the 5-year evaluation, ODDO BHF Trust GmbH from Frankfurt a.M. was able to defend last year’s victory with a very narrow lead. Successful stock picking in Europe and North America remains the basis of success. LIQID Asset Management GmbH, the digital asset management company from Berlin, has to be content with second place. Rhein Asset Management S.A. from Wasserbillig secured another place on the podium.

Results overview – 60 months

  1. ODDO BHF Trust GmbH, Frankfurt a.M. [96.7 points]
  2. LIQID Asset Management GmbH, Berlin [95.2 points]
  3. Rhein Asset Management S.A., Wasserbillig [92.1 points]
  4. Hauck & Aufhäuser Privatbankiers AG, Frankfurt a.M. [81.8 points]
  5. DJE Kapital AG, Pullach [75.0 points]

“Due to the corona pandemic,” said Joachim Häger, partner and board member, ODDO BHF AG, “2020 was an extraordinarily challenging year on the stock market. Nevertheless, our asset management can come up with excellent performance figures. This is primarily thanks to our proven quality approach with an active country, sector and individual stock selection. We are pleased that we were able to secure assets for our customers in all risk classes and achieve significant added value in the equity-heavy custody accounts.”