German company Scope Ratings is planning a push into international bank ratings and has hired former Moody’s and one-time DBRS European bank rating head Sam Theodore.

Scope said today (Tuesday) that under the initiative it will rate European and global banks, and to that end it is assembling a team of analysts, initially in London.

The performance of the three major rating agencies – Moody’s, Standard & Poor’s and Fitch – has come under scrutiny since the onset of the financial crisis, with many market participants calling for greater competition. In the US players such as Kroll Bond Ratings have made a push into the industry, while Canada-headquartered DBRS has ramped up its activities – not least in Europe, where it launched a second attempt to establish itself in the European covered bond market in 2011.

DBRS had made an earlier move into Europe in 2007 before withdrawing in 2008. Theodore, now running Scope’s initiative, also led that DBRS push, having joined the rating agency in 2005 from Moody’s, where he ran European bank ratings. After DBRS he worked at the UK Financial Services Authority as a manager, banking sector, from 2008 to 2011, since when he had been working at the European Banking Authority as an analytical expert, risk assessment.

Scope said that its initiative fits well into the evolving landscape of the rating industry, with the calls for more competition and a wider diversity of opinions.

“Scope aims to offer a genuine European alternative in the bank rating arena, which is currently dominated by the large North American-based rating agencies,” said CEO Florian Schoeller.

“It marks the next step in Scope’s strategy to become a fully-fledged rating agency across Europe, thus moving beyond its traditional German market base, where it already has a recognized position in asset-based and corporate ratings,” he added.

Another German company, Feri EuroRating Services, in August 2012 announced that it was establishing a new structured finance and covered bond ratings business, having the previous year become a registered credit rating agency (CRA) under EU regulations – something Scope already is.

Scope’s Theodore today highlighted a need for “crisp, more transparent and forward-looking methodologies more suitable to the post-crisis banking realities… free of the legacies of the past”, not just for fundamental bank ratings, but also for covered bonds and capital instruments. He also said that repeated methodology adjustments are often disruptive for issuers and investors and can distort the meaning of rating symbols.

“Senior debt investors and lately segments of depositors alike have come to recognize that the risk of loss for bank liabilities is increasingly real and no longer automatically covered on a timely basis by public support,” added Theodore, saying that in this context a forward-looking assessment of the intrinsic credit strength of each bank through a mix of qualitative and quantitative factors is more essential than ever.