The head of the agency that stripped the US of its top-notch credit rating earlier this month is to step down in September.
Standard & Poor's president Deven Sharma will be replaced by Citibank's chief operating officer Douglas Peterson next month, the agency's parent, McGraw-Hill Companies, said. Mr Sharma, who has been in his current role since 2007, will leave McGraw-Hill at the end of the year.
The move comes after S&P analysts decided that US debt was no longer worthy of the highest "AAA" rating, although S&P said the two events were not connected. Recent weeks have also seen revelations regarding an investigation by the US Justice Department into the agency's ratings of complex mortgage securities that turned sour with astonishing speed during the credit crunch. For its part, S&P said that it has "received several requests from different Government agencies regarding US mortgage-related securities", and that it continued to cooperate with the requests.
The downgrade of US debt to "AA+" was criticised by the Obama administration, with officials claiming that the agency had gone ahead with the move despite admitting to a $2 trillion (£1.2trn) mathematical "error" in an early version of its decision.
The downgrade, which came in the wake of a rancorous political battle to raise the US debt ceiling, triggered stock market falls. However, it was not matched by the other large ratings agencies Fitch and Moody's. Moreover, in a sign that investors still view the country's debt as a safe haven, US Treasuries have attracted interest throughout the recent market turmoil, with yields falling to record lows.
Mr Peterson will take over on 12 September, with McGraw-Hill, which has come under pressure from shareholders to restructure its business, saying that Mr Sharma will stay on until the end of the year to work on a strategic review. "Doug is a seasoned executive with more than 25 years of global experience in financial services, risk management and capital markets," said the chairman and chief executive of the McGraw-Companies, Harold "Terry" McGraw III.
Mr Sharma said: "It has been a privilege to serve as the president of S&P and I am proud of what we as an organisation have achieved over the past four years. As McGraw-Hill continues its portfolio review, I will work closely with Terry and the leadership team to find ways to create even more shareholder value."
Shareholders in S&P's parent have been being calling for a break up of the group, which also owns the textbook publisher McGraw-Hill Education.
In a Securities and Exchange Commission filing this week, the hedge fund Jana Partners and the Ontario Teacher's Pension Fund, who together own 5.6 per cent of McGraw-Hill, also called on the company to "bolster" the ratings service with an "independent oversight figure" to help manage what they termed the "increasingly complex global regulatory landscape and improve dialogue with investors, regulators and the public".Reuse content