JPY 20 billion domestic shelf registration and JPY 9.7 billion in new debt rated
Tokyo, March 11, 2011 -- Moody's Japan K.K. has assigned a (P)Aa3 rating to the senior
subordinated debt of the JPY 20 billion domestic shelf registration program
(effective on August 24, 2010) of the Minato Bank, Ltd.
(Minato Bank) and an Aa3 rating to the Series 2 JPY9.7 billion
senior subordinated debt -- a taken down from the program.
The rating outlooks are negative.
The specific bond issues rated is:
JPY 9.7 billion Series 2 senior subordinated debt,
due 2021
RATING RATIONALE
The rating on Minato Bank's senior subordinated (domestic currency) debt
is Aa3, derived from the bank's D BFSR (baseline risk assessment
of Ba2) and Moody's assessment of the "very high" likelihood of support
from Minato Bank's parent bank, SMBC (Aa2 local currency deposit
rating).
The D bank financial rating is attributable mainly to three factors:
1) solid SME and retail loan customer base in its home market of Hyogo
Prefecture; 2) high risk positioning on a global comparison;
and 3) low Tier 1 ratio and asset quality compared with other rated banks
in Japan.
In addition, Moody's expects a high level of support from the parent
bank during stressed periods, if required, based on the following:
1) the involvement of SMBC's management in Minato Bank; 2) SMBC's
shareholding of 45% at end-September 2010; and 3) Minato
Bank's association with the parent bank brand.
Moody's notes that, in February 2011, the rating agency released
a Special Comment entitled, "Supported Bank Debt Ratings at Risk
of Downgrade Due to New Approaches to Bank Resolution,".
With this assessment, the ratings on the bank's subordinated
debts could be negatively affected.
The last rating action with respect to Minato Bank was taken on February
22, 2011, when the rating outlook for the bank's long-term
deposit rating changed to negative. This rating action follows
the change in Moody's outlook to negative from stable for the long-term
ratings of Sumitomo Mitsui Banking Corporation, Minato Bank's parent
bank.
The principal methodologies used in this rating were Moody's Bank Financial
Strength Ratings: Global Methodology, Incorporation of Joint-Default
Analysis into Moody's Bank Ratings: A Refined Methodology,
and Moody's Guidelines for Rating Bank Hybrid Securities and Subordinated
Debt, published on September 30, 2010, and available
on www.moodys.co.jp.
The Minato Bank, Ltd., headquartered in Kobe,
is a consolidated subsidiary of the Sumitomo Mitsui Banking Corporation.
REGULATORY DISCLOSURES
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, parties not involved in the ratings,
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Tokyo
Kyosuke Kaji
Asst Vice President - Analyst
Financial Institutions Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100
Tokyo
Minoru Kubota
MD - Financial Institutions
Financial Institutions Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100
Moody's Japan K.K.
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Moody's assigns (P)Aa3 to Minato Bank's domestic shelf Aa3 to its senior subordinated debt