Mr Deven Sharma, President of global rating agency Standard & Poor's, is being replaced, said a statement from McGraw-Hill Companies, the parent outfit of S&P.

His place will be taken by Citibank Chief Operating Officer, Mr Douglas Peterson.

This announcement is being chiefly viewed against the backdrop of the controversy following S&P's downgrade of the US Government debt on August 5. India-born Mr Sharma, 55, will work on a strategic portfolio review for the McGraw-Hill group until year-end when he leaves to pursue other opportunities.

Move criticised

The downgrade of US Government debt from AAA to AA+ for the first-time ever, triggered a huge sell-off in stock markets across the globe.

Both US Treasury officials and the administration reacted sharply to the downgrade and were critical of the methodology used by S&P, saying it overestimated future national debt by $2 trillion.

The S&P move was also criticised by Mr Warren Buffett, Chairman of Omaha, Nebraska-based Berkshire Hathaway Inc., and Nobel Laureate Paul Krugman.

Bloomberg, quoting a person with direct knowledge of the matter, said the Securities and Exchange Commission of the US is scrutinising the method S&P used to cut the US's credit rating and whether the firm properly protected the confidential decision.

However, an unnamed source quoted by Reuters said the move to replace Mr Sharma had been under way months before S&P announced its US debt downgrade.

A Bloomberg report, again quoting an unnamed source, said Mr Peterson was approached by McGraw-Hill as early this March.

Some reports suggested the change is to do with the pressure that McGraw-Hill faces from some of its shareholders to split into four units.

Mr Deven Sharma has been the President at S&P since August 2007. He was Executive Vice-President of Global Strategy of McGraw-Hill Companies Inc., from 2002 to 2006.

Before that, he was Partner at Booz Allen & Hamilton for 14 years. Mr Sharma has been Chairman and Additional Director of CRISIL Ltd (S&P's Indian arm) since October 29, 2009.

He has authored three books on competitive strategy, customer solutions, sales and marketing.

Rating agencies had been bitterly criticised for failing to anticipate the sub-prime crisis in the US.

A Bloomberg report pointed out that S&P reaffirmed its AAA rating for Lehman Brothers Holdings Inc's financial products unit on September 12, 2008, three days before the bank failed.

Since Mr Sharma came in, he has done little to enhance the credibility or reputation of the ratings agency, Mr Joshua Rosner, an analyst at the New York-based research firm Graham Fisher & Co, said by phone, to Bloomberg.

Significant revisions

Writing in the Wall Street Journal last year Mr Sharma said: “With respect to the assumptions underlying our ratings of US residential mortgage securities in recent years, yes, we and others, including banks and regulators, failed to anticipate how steep the fall in house prices would be.

“We have learned from this harsh lesson and have made significant revisions to our rating approach.

“For instance, our criteria for rating a security as AAA (our highest designation) include consideration of what could happen to a security, if the country faces an economic scenario on par with the Great Depression.”

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