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Japanese banks

get poor

Moody's rating

TOKYO: Moody's Investors Service Inc, one of the largest international credit rating agencies, on Monday assigned generally poor financial strength ratings to Japanese banks.

Moody's assigned ratings to 50 Japanese banks according to a new system it has devised for judging the intrinsic financial strength of such institutions. Almost all the banks were rated C+ or below, with many of them getting the weaker ratings of D or E on Moody's scale, which ranges from A to E.

The ratings had been eagerly awaited, given recent concern about the stability of the Japanese banking system in the wake of troubles at Tokyo's largest credit union, Cosmo Shinyo Kumiai. Financial authorities are now considering a strategy for how to deal with Cosmo after a run on its deposits.

Moody's assigned D or D+ ratings to many leading banks including Asahi Bank, the Long-Term Credit Bank of Japan and Mitsubishi Trust & Banking Corp. D-rated banks are regarded by Moody's as possessing adequate financial strength, but may be limited by weak financial fundamentals or an unstable operating environment.

Moody's assigned C+ ratings to other major Japanese banks including Bank of Tokyo, Mitsubishi Bank and Sanwa Bank, while C ratings were given to Dai-Ichi Kangyo Bank, Fuji Bank and the Industrial Bank of Japan.

Economists said the ratings could make it more difficult for some of the banks to operatre in global capital markets. Japanese banks face a tough task of eliminating huge bad loans following the collapse of the late 1980s "bubble" economy of inflated stock and land prices.-Reuter