Standard & Poor's Corp. said Tuesday it has assigned A long-term and A-1 short-term counterparty credit ratings to IYBank, the banking unit of major retailer Ito-Yokado Co.

"The ratings are based on the strategic importance of IYBank to its financially strong and supportive parent group, negligible credit risk in its asset portfolio, and its competitive ATM (automated teller machine) channels," the U.S. credit-rating agency said.

The ratings are roughly in line with the AA plus long-term and A-1 plus short-term ratings given to Ito-Yokado, which set up the bank in April together with Seven-Eleven Japan Co., Japan's biggest convenience store chain owned 51 percent by Ito-Yokado.

The bank plans to set up more than 7,000 ATMs in its parents' retail outlets, mainly in Seven-Eleven stores, within five years, and to generate revenue primarily in the form of fees to be charged on ATM usage by its own depositors and other institutions' customers.

"Backed by the dense nationwide chain of the parent group, IYBank will have the largest ATM network in Japan's banking industry. In addition, the bank's ATM network will benefit from the easy access provided through the parent's convenience stores, which are open 24 hours all year-round and located in busy thoroughfares," S&P said.

S&P said it is not clear the length of time IYBank will need to achieve profitability but noted that "the bank's business model seems reasonable given the fact that the ATM networks of traditional banks are not providing commensurate returns, due to limited opportunities for risk-rewarded investments."