(The following was released by the rating agency)
TOKYO (Standard & Poor‘s) July 19, 2012--Standard & Poor’s Ratings Services today said that its ratings on Sony Bank Inc. (A/Negative/A-1) are not affected by the bank’s announcement of its sale of Sony Bank Securities Inc. (not rated), a wholly owned subsidiary.
Sony Bank has agreed to sell its entire stake in Sony Bank Securities to financial holding company Monex Group Inc. (not rated). The transaction will be carried out on Aug. 1, 2012. Sony Bank also announced that it has reached a deal to strengthen its business ties with Monex Inc. (not rated), an online brokerage subsidiary of Monex Group. The announcement also does not affect our ratings on Sony Bank.
Sony Bank established Sony Bank Securities in 2007 as a wholly owned subsidiary. The securities company provides online trading services for securities-related products via Sony Bank’s Web site. However, intense competition with other online brokerages has delayed Sony Bank Securities’ efforts to turn profitable. Sony Bank Securities’ assets totaled JPY4.23 billion as of the end of fiscal 2011 (ended March 31, 2012). The company posted a pretax loss of JPY300 million in fiscal 2011. For the same period, Sony Bank posted a pretax profit of JPY3.96 billion.
Therefore, we believe the stake sale is likely to push up Sony Bank’s revenue to a certain degree, although it is likely to have a limited impact on the bank’s capitalization. We view the sale as a positive factor in our assessment of Sony Bank’s capital and earnings, but we do not expect to raise our “adequate” assessment. Meanwhile, stronger business ties with Monex are likely to enhance Sony Bank’s product lineup.
Nevertheless, it may take time for Sony Bank to take advantage of the partnership to materially expand its customer base. Therefore, the stake sale and the strengthening of its business ties with Monex are neutral factors in our assessment of Sony Bank’s business position.