The rating agencies market is changing. In particular, a reform has started in one of the largest and oldest Russian rating agencies – National Rating Agency (NRA). The purpose of it is not only to enlarge the business, but also to improve the corporate governance structure, insufficient quality of which has already been implemented for NRA in the risk of illegal business takeover.
About the reform of NRA has spoken its CEO, Viktor Chetverikov. According to him, existing NRA LLC will be closed as a legal entity, a company with the same name will be created on the basis of another LLC (NRA Derivative Ratings LLC, created by Mr Chetverikov as his 100% own legal entity, it has recently been renamed into NRA LLC) with the new owners of the Agency. 'I'm planning to leave to myself no more than 20%. We are looking for new partners, carrying out negotiations. As possible participants we consider non-profit partnerships, self-regulatory organizations and individuals,' explained Mr Chetverikov. Through them NRA expects to reach the required by the new law on credit rating agencies 50 million rubles of capital.
Overall, there are expected to be five or six investors with shares of 15-20% in the renewed NRA. According to Mr Chetverikov, negotiations on the participation in the capital of the renewed NRA are held with the National Association of Securities Market Participants (NAUFOR), with one of the non-commercial partnerships, which name was not disclosed, as well as with the AK&M Rating Agency. Thus, in fact, it also concerns a business combination of two out of five Russian rating agencies. Yesterday NAUFOR President did not answer Kommersant's call. Deputy CEO of AK&M Lyudmila Eremina confirmed the fact of negotiations being held with NRA. 'There is a direct recommendation from the regulator for rating agencies to enlarge, consolidate. Therefore, all market participants are now in the process of negotiation with each other,' she said. According to Ms Eremina, AK&M discusses this issue not only with NRA, but also with the other major rating agency – Expert RA. In what form would be carried out the consolidation with one or another agency is not yet decided.
The changes will also concern the form of controlling the Agency. NRA will refuse to be controlled solely by CEO. Operational activities will be managed by the Board. In addition, the amended Articles of Association of LLC require the presence of the Board of Directors. It will also include independent members, untied to the financial market. Invitations to the NRA's Board of Directors have already received Head of the Department of Stock Markets and Financial Engineering of the RANEPA's Faculty of Finance and Banking Konstantin Korischenko, CEO of Cbonds News Agency Sergey Lyalin, as well as Managing Partner of NAFI Pavel Samiev. 'Due to an agreement with my previous employer (Expert RA) I cannot work in the rating business until the summer of 2016. I'll wait until the term of all agreements expire. I am likely to accept the NRA's offer,' said Mr Samiev. Upon completion of all the transformations, NRA will submit the documents to the Central Bank for accreditation in the rating agencies register.
Consolidation and reform of corporate governance is a natural process in the maturing market. 'We welcome strengthening and enlargement of Russian rating agencies, because this process should contribute to the development of the financial market,' says CEO of Analytical Credit Rating Agency Ekaterina Trofimova.
Actually, the lack of corporate governance had already made a negative impact on NRA, which is one of the reasons why the reform has been started. As previously reported by Vedomosti, the Agency was drawn into the corporate raider scandal. In July 2015, the Agency's USRLE card had been amended by some unknown persons. As a result, among the members of LLC and on the post of the NRA's CEO appeared a citizen of Ukraine – Stryapan. Now NRA expects decisions on two cases: the arbitration (on recognition of USRLE changes as faulty) and criminal (on fraud and forgery of signatures). It is expected that after all the necessary procedures the old NRA LLC will be terminated. However, as an obstacle may serve the corporate governance structure – only three owners, each having a blocking stake. In particular, Maria Semenova, a person with whom NRA relates the legal problems in July, owns 25% of the 'old legal entity'.