Moody's Investors Service Inc. has cut the financial strength ratings of Fukuoka City Bank and Nishi-Nippon Bank to E from E-plus and E-plus from D, respectively.
Both regional banks are based in Fukuoka.
The U.S. rating agency's Japan unit also said it has lowered its long-term deposit rating on Nishi-Nippon Bank to Baa2 from Baa1, while keeping the same rating for Fukuoka City Bank unchanged at Baa3.
For Fukuoka City Bank, Moody's said the downgrade reflects its view that "the bank's accounting capital has deteriorated to a level requiring substantial capital support from the government, as a result of recent recognition of large credit costs."
Moody's also said that the bank's consolidation with Nagasaki Bank, a second-tier regional bank based in Nagasaki, will have "marginal" effects.
For Nishi-Nippon Bank, the agency said the latest action reflects its belief that there may be further erosion of the bank's "relatively weak economic capital . . . and likely deterioration of collateral value."
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.