DEVEN SHARMA is stepping down as president of Standard & Poor’s only weeks after the rating agency issued an unprecedented downgrade of the credit of the US, according to people familiar with the matter.
Mr Sharma will remain as an adviser to S&P’s owner McGraw-Hill for four months and leave the company at the end of the year, they said.
Mr Sharma will be replaced as S&P president by Douglas Peterson, chief operating officer of Citibank, the banking unit of Citigroup, they said.
The downgrade of US credit on August 5th led to the worst single day fall in US equity prices since the depths of the financial crisis, and triggered days of global market volatility.
People familiar with the matter said Mr Sharma’s departure was unrelated to the downgrade or reports that S&P is being investigated by the US justice department in connection with its ratings of dozens of mortgage securities in the years leading up to the financial crisis.
The McGraw-Hill board made the decision to replace Mr Sharma at a meeting on Monday, where it also discussed an ongoing strategic review.
People close to the company said the search for Mr Sharma’s replacement has been going on for six months, and was triggered by the split of its data, pricing and analytics business from its ratings business.
The creation of that new group, McGraw-Hill Financial, reduced the scope of Mr Sharma’s oversight, they said.
S&P has been subject to intense criticism following its decision to downgrade the rating on US sovereign debt from triple A to double A plus. This came after an agreement to raise the US debt limit fell short of the $4 trillion worth of deficit reduction measures that S&P suggested would be necessary to avert a downgrade.
Company officials hope that Mr Peterson’s appointment will help repair relations with Washington. Mr Peterson is known in the financial community as a seasoned banker with solid operating experience.
McGraw-Hill is also under pressure from activist investors seeking a break-up of the company and has acknowledged it has begun a strategic review of its entire portfolio. – (Copyright The Financial Times Limited 2011)
