Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Announcement:

Moody's reviews Commerzbank Group ratings for possible downgrade

17 Feb 2011

Commerzbank's C- BFSR affirmed, outlook negative; Eurohypo's BFSR downgraded to D-, outlook negative

Frankfurt am Main, February 17, 2011 -- Moody's Investors Service has today placed the senior debt and deposit ratings of several Commerzbank group entities on review for possible downgrade, specifically: (i) Commerzbank AG's Aa3 senior debt and deposit ratings; (ii) the Aa3 senior debt and deposit ratings of Commerzbank Europe (Ireland); (iii) Eurohypo AG's A1 senior debt and deposit ratings; and (iv) Deutsche Schiffsbank's A2 senior debt and deposit ratings.

Concurrently, the C- BFSR of Commerzbank AG has been affirmed; however, the outlook remains negative and the rating agency will, as part of the review, reassess the current Baa1 stand-alone mapping, which could move down to Baa2. The BFSR of Eurohypo AG has been downgraded to D- from D, with a negative outlook.

Additionally, Moody's has (i) affirmed the Prime-1 short-term ratings for Commerzbank AG, Commerzbank Europe (Ireland) and Eurohypo AG; and (ii) placed Deutsche Schiffsbank's Prime-1 short-term rating on review for possible downgrade.

Moody's noted that the transition risk of the senior debt or deposit ratings for Commerzbank and its subsidiaries is likely to be limited to no more than two notches. The review is expected to be completed in the short-term.

For a detailed list of ratings affected please refer to the end of the press release.

RATINGS RATIONALE

Moody's says that these rating reviews reflect (i) a reassessment of Eurohypo AG's risk profile, which resulted in today's downgrade of its stand-alone financial strength rating (BFSR) to D- from D; and (ii) Moody's view that a reassessment is warranted of the support uplift currently factored into the long-term ratings.

The downgrade of Eurohypo's BFSR to D- is driven by the bank's weak performance and its deteriorating asset quality (which remains below earlier expectations). Moody's reassessment of the support uplift is due to concerns that the extraordinary level of support provided during the financial crisis will not likely be repeated, if it is required again in the future. This has led Moody's to place the long-term debt ratings of the Commerzbank Group entities on review for possible downgrade. Commerzbank Europe (Ireland)'s debt ratings are also subject to Moody's review for downgrade as that subsidiary's ratings are aligned with those of the parent bank.

COMMERZBANK'S C- BFSR (Baa1) WITH NEGATIVE OUTLOOK REMAINS UNDER PRESSURE

Moody's affirmation of Commerzbank's C- BFSR reflects (i) the solid progress that the group has made in de-risking and downsizing the balance sheet; (ii) the gradual recovery of its profitability, (although this remains at weak levels within the C- rating category); and (iii) the improved regulatory and economic capital levels.

"In spite of this progress, in our view the group continues to face various challenges. Adverse factors include (i) the substantial losses contributed by Eurohypo and its poor asset quality; (ii) Commerzbank group's weak quality of earnings and modest profitability outlook as important steps of its restructuring plan and the Dresdner integration have yet to be accomplished; and (iii) Commerzbank's need to address its weak quality of capital, and to repay hybrid instruments provided by the government during the crisis," explains Katharina Barten, a Moody's Vice President and Senior Credit Officer.

Moody's expects that Commerzbank's repayment of its hybrid capital will likely constrain the Tier 1 ratio at a level below or close to 10%.

"As fragility in the markets persists and event risk is relatively high, the combination of these factors result in continued uncertainty for the development of the group's stand-alone credit profile, warranting the continued negative outlook on this rating," adds Ms Barten.

FOCUS ON COMMERZBANK'S L/T RATING EXTRAORDINARY SUPPORT ASSUMPTIONS

The ratings review will focus on the support uplift assumptions factored into the long-term ratings of Commerzbank, following Moody's concerns that the extraordinary level of support provided during the financial crisis is not likely to be repeated, if required again in the future. Before the financial crisis -- and before the merger with Dresdner Bank -- Commerzbank's long-term debt and deposit ratings benefited from only two notches of rating uplift, while the current ratings still incorporate four notches of uplift due to systemic support. As part of its review, Moody's will also assess the unlimited capital increase option under Germany's new reorganisation act, as well as the impact of a government roadmap for the repayment of state aid provided to Commerzbank during the financial crisis.

EUROHYPO'S BFSR DOWNGRADE TO D- REFLECTS POOR ASSET QUALITY AND PERFORMANCE

The downgrade of Eurohypo's BFSR to D- (which now maps into a Ba3 rating on Moody's long-term rating scale), reflects the poor performance and slow progress of Germany's largest commercial real-estate lender to rebuild some of its earlier financial strength in persistently challenging market conditions. The D- BFSR further takes into account (i) the increased credit and market risk and the resulting high earnings volatility of Eurohypo's public-sector finance business; and (ii) Moody's expectation that it will take the bank longer than previously anticipated to rebuild an independent funding franchise.

The negative outlook on the D- BFSR reflects Moody's view that Eurohypo's public-sector finance franchise is impaired and vulnerable to market shocks and that its commercial real-estate franchise remains very weak.

REVIEW OF EUROHYPO'S A1 L/T RATINGS REFLECTS BFSR DOWNGRADE, WEAKENING SYSTEMIC SUPPORT

The review for possible downgrade of Eurohypo's A1 long-term debt ratings reflects the downgrade of the BFSR to D- and, additionally, Moody's view that systemic support for the bank is likely to weaken in the medium term. Over the next several years the agency sees limited potential for upward rating migration for the BFSR of Eurohypo, even at the lower D- level. This in turn limits the prospects that an improvement of its financial strengths (and thus the BFSR) could gradually offset weakening systemic support over the next two to three years.

As a result of Eurohypo's continued dependence on Commerzbank, in particular on substantial levels of intra-group funding, Moody's will also review the parental support (currently only one notch) as it may continue to be available for longer than previously anticipated. A higher degree of parental support could off-set some of the pressure of weakening systemic support, even though Eurohypo has to be divested by the end of 2014, according to the compensation measures that were agreed with the European Commission. The aspect of continued parental support will be a key consideration in the rating level that will be assigned, post-review.

REVIEW OF COMMERZBANK EUROPE IRELAND'S L/T RATINGS BASED ON PARENT RATING REVIEW

The affirmation of the C- BFSR and the review for possible downgrade of the Aa3 senior debt and deposit ratings of Commerzbank Europe (Ireland) mirror the rating action on Commerzbank's ratings, following Moody's approach of maintaining the same ratings for the parent bank and subsidiary. This is based on the Irish subsidiary's close integration into and support from the group.

Important considerations supporting the alignment of the subsidiary's BFSR and long-term ratings with those of Commerzbank are (i) the continued commitment of the parent to support the subsidiary based on the existing Letter of Comfort; (ii) the legal obligation of Commerzbank as majority stakeholder based on the "unlimited company" status of the Irish bank, which requires the parent to make good any shortfalls of funds in liquidation; and (iii) the small size of Commerzbank Europe (Ireland) compared with the size of the group, which means the parent bank can support its Irish subsidiary with relative ease.

REVIEW OF DEUTSCHE SCHIFFSBANK'S L/T RATINGS BASED ON PARENT RATING RVEVIEW

Deutsche Schiffsbank's A2 senior debt and deposit ratings currently benefit from Moody's parent support assumptions, whereby the parent bank's exact stand-alone financial strength is the relevant input factor for the review. If Commerzbank's C- BFSR were to be mapped to the lower Baa2 level, Deutsche Schiffsbank's senior debt ratings could also be affected. Moody's will, at the same time, revisit the systemic support assumptions for Deutsche Schiffsbank.

Given the potential pressure on the current A2 senior debt and deposit ratings, a review of the Prime-1 short-term rating of Deutsche Schiffsbank also forms part of the group ratings review.

DETAILED LIST OF RATING ACTIONS

(1) Commerzbank AG

- BFSR: affirmed at C-, outlook negative

- Aa3 senior debt and deposit ratings: placed on review for possible downgrade

- A1 subordinated debt ratings: remain on review for possible downgrade

- (P)A2 program rating for senior subordinated Tier III instruments: placed on review for possible downgrade

- Prime-1 short-term rating: affirmed

Although Commerzbank's C- BFSR has been affirmed today, the outlook remains negative and the rating agency will, as part of the review, reassess the current Baa1 stand-alone mapping, which could move down to Baa2.

(2) Eurohypo AG

- BFSR: downgraded to D- (Ba3) from D (Ba2), outlook negative

- A1 senior debt and deposit ratings: placed on review for possible downgrade

- A2 subordinated debt ratings: remain on review for possible downgrade

- (P)Ba2 rating for senior subordinated Tier III instruments: placed on review for possible downgrade

- Prime-1 short-term rating: affirmed

Eurohypo's D- BFSR with a negative outlook now maps to Ba3 on Moody's long-term rating scale.

(3) Commerzbank Europe (Ireland)

- BFSR: affirmed at C-, outlook negative

- Aa3 senior debt and deposit ratings: placed on review for possible downgrade

- A1 subordinated debt ratings: remain on review for possible downgrade

- Prime-1 short-term rating: affirmed

The rating actions on Commerzbank Europe (Ireland) mirror those on Commerzbank's ratings, as Moody's generally aligns all ratings of the Irish subsidiary with those of Commerzbank, owing to the subsidiary's close integration in the group.

(4) Deutsche Schiffsbank AG

- BFSR: D (Ba2), not affected

- A2 senior debt and deposit ratings: placed on review for possible downgrade

- A3 subordinated debt ratings: remain on review for possible downgrade

- Prime-1 short-term rating: placed on review for possible downgrade

The BFSR of Deutsche Schiffsbank, currently at D and mapping into a Ba2 on Moody's long-term rating scale, remains unaffected by today's rating action.

Commerzbank's and Eurohypo's ratings for senior subordinated debt of A1 and A2 respectively remain on review for possible downgrade. Please also refer to Moody's press release dated 16 December 2010, on our review of senior subordinated debt across the German banking system.

The A2 rating for Commerzbank's Tier III instruments and the Baa2 rating for Eurohypo's Tier III instruments have been placed on review for possible downgrade, as these instruments are notched from the adjusted issuer stand-alone ratings.

Aaa rated bonds of Commerzbank AG that benefit from a guaranty of the Financial Market Stabilisation Agency (also known as "SoFFin") are unaffected by today's rating action.

Equally, the rating of the group's various hybrid instruments, which are rated based on Moody's expected-loss approach, are also unaffected by today's rating action.

Moody's will comment separately on any potential impact on the various covered bonds issued by Commerzbank Group entities.

PRINCIPAL METHODOLOGIES AND LAST RATINGS ACTIONS

The principal methodologies used in this rating were Bank Financial Strength Ratings: Global Methodology published in February 2007, and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology published in March 2007.

Moody's last rating action on Commerzbank AG and Eurohypo was on 16 Dec 2010 when the rating agency placed German banks' subordinated debt on review for downgrade.

Moody's last rating action on Deutsche Schiffsbank was on 03 Jun 2009 when the rating agency downgraded Deutsche Schiffsbank's BFSR to D from C+.

Moody's last rating action on Commerzbank Europe (Ireland) was on 02 Mar 2009 when the rating agency downgraded Commerzbank group BFSRs and hybrids ratings.

Domiciled in Frankfurt, Germany, Commerzbank reported total assets of EUR848 billion as at 30 September 2010 and a pre-tax profit for the 9 months of EUR1.1 billion.

Headquartered in Eschborn, Germany, Eurohypo is a fully owned subsidiary of Commerzbank. Based on half-year results as of June 2010, Eurohypo reported total assets of EUR257 billion and a pre-tax loss for the 6 months of EUR215 million.

Headquartered in Hamburg and Bremen, Deutsche Schiffsbank is a majority owned subsidiary of Commerzbank. Based on half-year results as of June 2010, Deutsche Schiffsbank reported total assets of €17.5 billion and a pre-tax loss for the 6 months of EUR20 million.

Headquartered in Dublin, Ireland, Commerzbank Europe (Ireland) is a majority owned subsidiary of Commerzbank. At the end of December 2009, the bank had total assets, according to Irish GAAP, of EUR2.3 billion and reported a pre-tax profit of EUR9 million for 2009.

Frankfurt am Main
Katharina Barten
VP - Senior Credit Officer
Financial Institutions Group
Moody's Deutschland GmbH
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Frankfurt am Main
Carola Schuler
MD - Banking
Financial Institutions Group
Moody's Deutschland GmbH
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's reviews Commerzbank Group ratings for possible downgrade
No Related Data.
© 2018 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be reckless and inappropriate for retail investors to use MOODY’S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or other professional adviser.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.