U.S. credit-rating agency Standard & Poor's has assigned Aozora Bank a credit rating of BB-pi, which is considered speculative.
"The rating reflects the higher business risk of Aozora (formerly Nippon Credit Bank) compared with that of other major banks in Japan, impairment of its franchise due to temporary nationalization, an expected slow recovery in profitability and uncertainty surrounding the bank's funding," S&P said Monday.
The rating is based on public information from the bank. Ratings of BB or below are normally considered speculative.
Aozora expressed dissatisfaction with the move.
"(The bank's) performance is steadily improving, with lending assets showing a net increase," Aozora said. "It is regrettable that S&P unveiled the rating without providing the opportunity to explain it sufficiently to us."
The failed Nippon Credit Bank, under government control between December 1998 and August 2000, was acquired September by a consortium led by Softbank Corp., Orix Corp. and Tokio Marine & Fire Insurance Co. It restarted operations as Aozora on Jan. 4.