German banks send ‘please explain’ letter to S&P over invoices
Germany’s banks have reportedly written a blunt letter to Standard and Poor’s asking it to explain a hike its prices, marking a further deterioration in the relationship between the agencies and Europe’s institutions.
Germany’s Banking Industry Committee, encompassing private and public sector and cooperative banks, said banks had received bills recently significantly higher than in previous years and were “unable to detect that these price increases are the result of improved services or quality,” according to Reuters.
The letter was sent jointly to S&P president Douglas Peterson and Germany head Torsten Hinrichs, according to news wires.
“[Banks] consider this form of intransparent price increase from Standard & Poor’s to be unacceptable,” the wires reported.
The ‘please explain’ note exacerbates an already sour atmosphere between the two camps.
In June, fellow agency Moody’s cut its ratings on six German banks, plus three in neighbouring Austria, indicating it believes neither country nor its banks would remain immune from a further deterioration in the Eurozone crisis.
The biggest affected was Commerzbank, which was cut to A3 from A2, but DekaBank, DZ Bank, Landesbank Baden-Wuerttemberg, Landesbank Hessen-Thueringen and Norddeutsche Landesbank were also hit.
In its letter today the bank committee reportedly demanded S&P publish a “transparent” listing of fees.
But the agency responded in a statement by saying: “We believe our new fee schedule produces a fairer and more transparent cost structure, which better reflects the benefits of our ratings for individual issuers. The benefit of an S&P rating in terms of issuance costs is many times the level of our fees.”
The agencies have also come under fire from Europe’s politicians, who also demanded the agencies describe more fully how they reach ratings, for sovereigns in their case.
The politicians also suggested requiring agencies to submit proposed ratings to governments well before publishing them, but they have since softened their stance.