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November 25, 2013 5:30 pm
Standard & Poor’s, the credit rating agency fighting allegations it defrauded investors in the run-up to the credit crisis, has poached the head of Citigroup’s custody division to be its new chief executive.
The appointment of Neeraj Sahai follows the promotion of Doug Peterson, S&P’s former chief executive, to lead the rating agency’s parent company, McGraw Hill Financial.
Mr Peterson, who took over his new role at the start of November, is also an alumni of Citi. Mr Sahai “has significant expertise serving global capital markets and his insights, leadership and background in driving growth, as well as in risk, control and governance will be enormously valuable,” Mr Peterson said.
Mr Sahai beat several internal S&P candidates for the job. He joined Citi in his native India in 1984, and has previously been a head of risk review in the capital markets business and chief financial officer of global transaction services.
As head of the securities and fund services division since 2005, he has expanded Citi’s custody business to include services for securities issuers, investors and intermediaries in 95 countries.
S&P is expecting long-term growth to expansion in emerging markets, including in Asia, where capital markets are under-developed and where issuing bonds to investors could increasingly take the place of borrowing directly from banks.
S&P has made $779m in operating profit for McGraw Hill in the first nine months of this year, a 29 per cent improvement on 2012 thanks to booming corporate bond issuance globally and a recovery of structured finance issuance in the US.
Heidrick & Struggles, the headhunter, were given the task of finding an executive comfortable dealing with asset managers, banks and regulators, who have taken a greater role overseeing credit rating agencies since the crisis.
S&P is in the middle of defending itself against a $5bn civil lawsuit from the US Department of Justice, which claims it fraudulently inflated credit ratings on mortgage derivatives while the US housing market began to crumble.
Mr Peterson was brought in from Citi in 2011 to cement internal changes designed to improve its ratings procedures in the light of the credit crisis. S&P says its mortgage ratings were made in good faith and not based on the need to win market share.
His appointment as chief executive of McGraw Hill Financial follows the retirement of Terry McGraw, whose great-grandfather founded the publishing conglomerate in 1888.
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