The European Union's markets watchdog has criticised the world's top three ratings agencies over a lack of transparency over how they evaluate banks and has demanded more robust internal reviews of their methods. The European Securities and Markets Authority (ESMA), which studied Moody's, Fitch and Standard & Poor's, said there was inadequate disclosure of the in-house methodologies used to compile their ratings and how they keep these methods under review. Announcing the results of its second annual review of the banking sector on Monday, ESMA said that it looked at bank ratings because of their close link to ratings of government debt, a focus of the euro zone crisis. The EU has passed three sets of laws over the past three years to directly supervise ratings agencies after finding flaws in ratings during the 2007-09 financial crisis. Some securitised products became untradeable despite being given high ratings. Rating downgrades of sovereign debt of some euro
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