Moody's Investors Service on Friday put its ratings for subordinated debentures and preferred stock issued through subsidiaries of five Japanese banking institutions under review for possible downgrade.
Affected by Friday's announcement were four subsidiaries of Sakura Bank, two Daiwa Bank units and one subsidiary each at Mitsui Trust & Banking Co., Yasuda Trust & Banking Co. and Hokuriku Bank.
The U.S-based credit research firm said these ratings "directly reflect the parent banks' creditworthiness based on the strength of guarantees or other support provided by the parent banks."
Moody's said it believes that as weaker banks are reorganized over the medium term, some losses may be incurred on junior obligations qualifying as regulatory capital, such as subordinated debentures and preferred stock, thus leading to Friday's decision to place them under review. Friday's placement does not affect the parent banks' financial strength ratings, which currently stand at E or E+.