Fitch Ratings

History

Fitch Ratings is dual headquartered in New York and London. Hearst owns 100 percent of the company following its acquisition of an additional 20 percent for $2.8 billion on April 12, 2018. Hearst had owned 80 percent of the company after increasing its ownership stake by 30 percent on December 12, 2014, in a transaction valued at $1.965 billion. Hearst's previous equity interest was 80 percent following expansions on an original acquisition of 20 percent interest in 2006.

Hearst had jointly owned Fitch with FIMALAC SA, which held 20 percent of the company until the 2018 transaction. Fitch Ratings and Fitch Solutions are part of the Fitch Group.

The firm was founded by John Knowles Fitch on December 24, 1914, in New York City as the Fitch Publishing Company. In 1989, the company was acquired by a group including Robert Van Kampen. In 1997, Fitch was acquired by FIMALAC and was merged with London-based IBCA Limited, a FIMALAC subsidiary. In 2000, Fitch acquired both Chicago-based Duff & Phelps Credit Rating Co. (April) and Thomson Financial BankWatch (December).

Fitch Ratings is the third largest NRSRO rating agency, covering a more limited share of the market than S&P and Moody's, though it has grown with acquisitions and frequently positions itself as a "tie-breaker" when the other two agencies have ratings similar, but not equal, in scale.

In September 2011, Fitch Group announced the sale of Algorithmics (risk analytics software) to IBM for $387 million.

In June 2022, Fitch Group acquired GeoQuant, an AI-driven data and technology company.

Operations

Fitch Ratings is a subsidiary of Fitch Group, a holding company wholly owned by Hearst Communications.{{Cite news |last=Hufford |first=Austen |date=April 12, 2018 |title=Hearst Takes Full Ownership of Fitch Group Credit Rating Agencies on the Watch List |publisher=Oxford University Press |year=2012 |quote=In addition to Fitch Ratings, the Fitch Group also includes Fitch Solutions, a distribution channel for Fitch Ratings products and a provider of data, analytics, and related services. |isbn=978-0191640995}} Fitch Group employs approximately 5,000 people, including over 1,600 analysts. Paul Taylor is president and chief executive officer of Fitch Group.{{Cite news |last=Partington |first=Richard |date=April 12, 2012 |title=Meet the thick-skinned chief of Fitch Ratings What We Do |url=https://www.fitchratings.com/about-us |publisher=Fitch Ratings |quote=We have over 2,400 employees[.] |access-date=October 16, 2024}} Ian Linnell is president of Fitch Ratings.{{cite web |title= Meet The Fitch Group leadership team |url=https://www.fitch.group/leadership |publisher=Fitch Group |access-date=October 16, 2024}}

Criticism

The main credit rating agencies, including Fitch, were accused of misrepresenting the risks associated with mortgage-related securities, which included the collateralized debt obligation (CDO) market. There were large losses in the CDO market that occurred despite being assigned top ratings by the CRAs.

For instance, losses on $340.7 million worth of collateralized debt obligations (CDO) issued by Credit Suisse Group added up to about $125 million, despite being rated AAA by Fitch.{{Citation However, differently from the other agencies, Fitch was warning the market on the constant proportion debt obligations (CPDO) with an early and pre-crisis report highlighting the dangers of CPDOs in 2007.{{Citation

References

References

1. "2011 Fiscal". FIMALAC.
2. "Fitch Group Becomes a Wholly-Owned Hearst Business".
3. Blumenthal, Richard. (May 5, 2009). "Three credit rating agencies hold too much of the power". [[Juneau Empire]].
4. "Sale of 10% of Fitch Group to Hearst".
5. (12 April 2018). "Hearst Takes Full Ownership of Fitch Group". The Wall Street Journal.
6. (9 February 2012). "Hearst buys another 10 percent of Fitch for $177 million". Reuters.
7. (April 21, 1989). "Investor Group Acquires Fitch Bond Rating Agency". The New York Times.
8. Lavin, Douglas. (October 17, 1997). "France's Fimalac Purchases Fitch From Van Kampen". [[The Wall Street Journal]].
9. Gasparino, Charles. (March 8, 2000). "Fitch Acquires Duff & Phelps In Latest Credit-Rating Union".
10. (24 June 2009). "FACTBOX: List of 10 rating agencies recognized by U.S. SEC". Reuters.
11. (1 September 2011). "IBM Buying Algorithmics for $387M". Traders Magazine.
12. (June 22, 2022). "Fitch Group Acquires GeoQuant".
13. "100+ years of history".
14. White, Lawrence J.. (2010). "Markets: The Credit Rating Agencies". Journal of Economic Perspectives.