S&P Revises Outlook to Negative on Four Japanese Banks.TOKYO--(BUSINESS WIRE)--Standard & Poor's CreditWire 9/16/98-- Standard & Poor's today revised its outlook for Dai-Ichi Kangyo Bank The Dai-Ichi Kangyo Bank, Limited (株式会社第一勧業銀行 Ltd., Industrial Bank of Japan Ltd., Sanwa Bank Ltd., and Fuji Bank The Fuji Bank, Limited (株式会社富士銀行 Ltd., and their related entities (see list below), to negative from stable. Standard & Poor's has affirmed the ratings of these four banks. A worsening wors·en tr. & intr.v. wors·ened, wors·en·ing, wors·ens To make or become worse. Noun 1. worsening - process of changing to an inferior state decline in quality, deterioration, declension operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. has heightened the risk faced by Japanese banks, with new problem loans, due to the recession, adding to the burden of the still unresolved problem loans dating back to the burst of the economic "bubble" in the 1980s. Standard & Poor's is also concerned that the continuing political wrangling and delays in implementing decisive and effective measures to revitalize re·vi·tal·ize tr.v. re·vi·tal·ized, re·vi·tal·iz·ing, re·vi·tal·iz·es To impart new life or vigor to: plans to revitalize inner-city neighborhoods; tried to revitalize a flagging economy. the banking system will further aggravate the situation. As a result, all major banks including city banks, trust banks, and long-term credit banks have negative outlooks. The ratings could be revised if future credit costs significantly exceed previous estimates and further weaken the banks' financial strength; liquidity conditions deteriorate de·te·ri·o·rate v. 1. To grow worse in function or condition. 2. To weaken or disintegrate. ; or unrealized losses Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. on stock portfolios enlarge TO ENLARGE. To extend; as, to enlarge a rule to plead, is to extend the time during which a defendant may plead. To enlarge, means also to set at liberty; as, the prisoner was enlarged on giving bail. substantially. New problem loans will likely increase, in line with the weakening domestic economy and the increasing number of bankruptcies. Japan's GDP GDP (guanosine diphosphate): see guanine. shrank shrank v. A past tense of shrink. shrank Verb a past tense of shrink shrank shrink by an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. 3.3% in the first quarter of fiscal 1998 (year ends March 31, 1999) over the previous quarter, posting three quarters of consecutive negative growth, the worst performance since World War II. The rate cut by the Bank of Japan, on September 9, is unlikely to have a substantial impact on economic activity. In addition, unstable conditions in other Asian markets will likely place additional pressure on the asset quality of the major Japanese banks, though the magnitude of the problems is expected to be smaller than the problems in the domestic market. Relative to the high number of potential problem loans, the capitalization of the Japanese banks is very low. Furthermore, Japanese banks are highly exposed to the volatile stock market, and the sharp decline in stock prices has eroded e·rode v. e·rod·ed, e·rod·ing, e·rodes v.tr. 1. To wear (something) away by or as if by abrasion: Waves eroded the shore. 2. To eat into; corrode. their financial capacity. If the Nikkei Stock Index ends the year below 14,000, most major Japanese banks will have unrealized losses. The change of accounting rules, which allows banks to use the original-cost valuation method, could avoid a negative impact on the reported results, but the strains on the banks' true financial conditions remain. Despite the severity of the banking industry's problems, the Japanese government has not shown strong leadership in managing the problems and restoring market confidence. The Japanese government's "Comprehensive Plan for Financial Revitalization re·vi·tal·ize tr.v. re·vi·tal·ized, re·vi·tal·iz·ing, re·vi·tal·iz·es To impart new life or vigor to: plans to revitalize inner-city neighborhoods; tried to revitalize a flagging economy. " and other related laws, which were expected to go through the Diet (parliament) in August, have not yet been approved. Standard & Poor's is concerned that further delay in taking decisive action will further increase future bail-out costs and postpone an economic recovery. Furthermore, political disputes between the ruling party and the opposition parties over support for The Long-Term Credit Bank of Japan Long-Term Credit Bank of Japan (日本長期信用銀行 Ltd. (LTCB LTCB Long-Term Credit Bank (Japan) ) have intensified. Given the government's previous strong statements of support for LTCB and its proposed merger with Sumitomo Trust & Banking Co. Ltd., there could be a negative impact on the funding conditions for all Japanese banks, if the merger were to fall through and creditors lose money, said Standard & Poor's.---CreditWire -0-
RATINGS AFFIRMED; OUTLOOK NEGATIVE
TO FROM
Dai-Ichi Kangyo Bank Ltd.
Counterparty credit rtg BBB+/Negative/A-2 BBB+/Stable/A-2
CD BBB+/A-2
Euro CP A-2
Sr unsecd BBB+
Dai-Ichi Kangyo Bank Nederland N.V.
Counterparty credit rtg BBB+/Negative/-- BBB+/Stable/--
Sr unsecd BBB+
Dai-Ichi Kangyo Australia Ltd.
Counterparty credit rtg BBB+/Negative/A-2 BBB+/Stable/A-2
Industrial Bank of Japan Ltd.
Counterparty credit rtg A-/Negative/A-2 A-/Stable/A-2
CD A-/A-2
Sr unsecd A-
Sub debt BBB+
Jr sub debt BBB
Industrial Bank of Japan Finance Co. N.V.
Counterparty credit rtg A-/Negative/-- A-/Stable/--
Sr unsecd A-
Sub debt BBB+
Jr sub debt BBB
Industrial Bank of Japan (Canada)
Counterparty credit rtg --/A-2
CD A-2
IBJ Australia Bank Ltd.
Counterparty credit rtg A-/Negative/A-2 A-/Stable/A-2
CP A-2
Sanwa Bank Ltd.
Counterparty credit rtg A-/Negative/A-2 A-/Stable/A-2
CD A-/A-2
Sr unsecd A-
Sanwa Business Credit Corp.
Counterparty credit rtg BBB+/Negative/A-2 BBB+/Stable/A-2
CP A-2
Sr unsecd BBB+
Sanwa Australia Finance Ltd.
Counterparty credit rtg A-/Negative/A-2 A-/Stable/A-2
Sr unsecd
(gtd. Sanwa Bank Ltd.) A-
Sanwa International Finance Ltd.
Counterparty credit rtg A-/Negative/-- A-/Stable/--
Sanwa Australia Ltd.
Counterparty credit rtg A-/Negative/A-2 A-/Stable/A-2
CP A-2
Sr unsecd
(gtd. Sanwa Bank Ltd.) A-
Sanwa Singapore Ltd.
Counterparty credit rtg A-/Negative/-- A-/Stable/--
Sanwa Finance Aruba A.E.C.
Counterparty credit rtg BBB+/Negative/-- BBB+/Stable/--
Sr unsecd
(gtd. Sanwa Bank Ltd.) BBB+/BBB
Fuji Bank Ltd.
Counterparty credit rtg BBB+/Negative/A-2 BBB+/Stable/A-2
CD BBB+/A-2
Sr unsecd BBB+
Fuji International Finance PLC
Counterparty credit rtg A-2
CP A-2
Fuji Bank (Luxembourg) S.A.
Counterparty credit rtg BBB+/Negative/-- BBB+/Stable/-
Fuji International Finance (Australia) Ltd.
Counterparty credit rtg BBB+/Negative/A-2 BBB+/Stable/A-2
Fuji International Finance (HK) Ltd.
Counterparty credit rtg BBB+/Negative/-- BBB+/Stable/--
Fuji Finance (Bermuda) Trust
Preferred stock BB+
CONTACT: Yoshiyuki Mitsugi, Tokyo (81) 3-3593-8721 Naoko Nemoto, Tokyo (81) 3-3593-8720 Roger B Taillon, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of (1) 212-208-1570 David A Collins (Media), Tokyo (81) 3-3593-8579 For more information on criteria or subscriptions: http://www.ratings.standardpoor.com |
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