TEXT-Fitch: Japan's Major Banks on RWN on Sovereign Downgrade

Wed May 23, 2012 12:11am EDT

Related Topics

(The following was released by the rating agency) TOKYO, May 23 (Fitch) Fitch Ratings has placed the ratings of major Japanese banks, including their Support Rating Floors, on Rating Watch Negative (RWN), following its downgrade of Japan's sovereign Long-term Foreign and Local Currency Issuer Default Ratings (IDR) to 'A+', from 'AA' and 'AA-' respectively. The Outlook for Japan's IDRs is Negative. A full list of rating actions is provided below.

The Long-term IDRs of Japan's major banks are currently support-driven and at their Support Rating Floors of 'A'. The RWN on the Support Rating Floor reflects the government's reduced flexibility to provide financial assistance to banks in case of need. Fitch expects the banks' Long-Term IDRs to be downgraded by no more than one notch.

The government's financial soundness underpinning its ability to extend support has continued to weaken due to growing fiscal pressure from rising social security costs in particular. However, Fitch believes that the government's propensity to support major banks, when necessary, remains intact, given their systemic importance in both domestic and overseas markets.

Fitch considers there to be no immediate impact on the banks' Support Rating of '1' as long as Japan's sovereign IDRs are not downgraded from their current levels. However, if the government's financial profile were to further deteriorate, this could trigger a further sovereign downgrade and a corresponding action in the major banks' Support Rating of '1'.

The banks' Short-term IDRs and Viability Ratings are independent of Fitch's view on the ability of state support, and are not affected by today's rating action.

Fitch aims to resolve the RWN within the next few months.

The ratings placed on RWN are as follows.

Entities under Mitsubishi UFJ Financial Group (MUFG)

Bank of Tokyo-Mitsubishi UFJ, Ltd.:

- Long-Term Foreign and Local Currency IDRs: 'A' placed on RWN

- Support Rating Floor: 'A' placed on RWN

- Senior unsecured debt: 'A' placed on RWN

- Senior subordinated debt (Lower Tier 2 bonds under Basel ll): 'A-' placed on RWN

Mitsubishi UFJ Trust and Banking Corporation:

- Long-Term Foreign and Local Currency IDRs: 'A' placed on RWN

- Support Rating Floor: 'A' placed on RWN

Entities under Mizuho Financial Group (MHFG)

Mizuho Financial Group, Inc., Mizuho Bank, Ltd., Mizuho Trust & Banking Co., Ltd.:

- Long-Term Foreign and Local Currency IDRs: 'A' placed on RWN

- Support Rating Floor: 'A' placed on RWN

Mizuho Corporate Bank, Ltd.:

- Long-Term Foreign and Local Currency IDRs: 'A' placed on RWN

- Support Rating Floor: 'A' placed on RWN

- Senior unsecured debt: 'A' placed on RWN

Mizuho Financial Group (Cayman) Limited:

- Senior subordinated debt (Lower Tier 2 bonds under Basel ll): 'A-' placed on RWN

Entities under Sumitomo Mitsui Financial Group (SMFG)

Sumitomo Mitsui Financial Group, Inc.:

- Long-Term Foreign and Local Currency IDRs: 'A' placed on RWN

- Support Rating Floor: 'A' placed on RWN

Sumitomo Mitsui Banking Corporation:

- Long-Term Foreign and Local Currency IDRs: 'A', placed on RWN

- Support Rating Floor: 'A' placed on RWN

- Senior unsecured debt: 'A' placed on RWN

- Senior subordinated debt (Lower Tier 2 bonds under Basel ll): 'A-' placed on RWN

Sumitomo Mitsui Banking Corporation Europe Limited:

- Long-Term Foreign Currency IDR: 'A' placed on RWN Entity under

Sumitomo Mitsui Trust Group Sumitomo Mitsui Trust Bank, Limited (SMTB):

- Long-Term Foreign and Local Currency IDRs: 'A' placed on RWN

- Support Rating Floor: 'A' placed on RWN

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.