Standard & Poor's said Thursday that Mizuho Financial Group Inc.'s new corporate revitalization project will improve the soundness of the group's loan portfolio but will not trigger any immediate ratings action on its subsidiary banks.
Japan's largest banking group said Wednesday it will form five financial affiliates specializing in reviving feeble corporate borrowers, including four that will take over possible bad loans from the group's banks.
The group, which comprises Mizuho Bank, Mizuho Corporate Bank and Mizuho Trust & Banking Co., will take over loan assets of 4.6 trillion yen, representing a substantial part of the group's problem assets.
"The transfer of the loans and the revitalization of troubled borrowers will improve the Mizuho Financial group's asset quality to some extent if the process is appropriate and immediate," said Yuri Yoshida, a credit analyst at S&P in Tokyo.
"But details of the revitalization project and the prospects for its progress are still unclear," Yoshida added.
The U.S. credit-rating agency said the revitalization companies will be wholly owned subsidiaries of Mizuho Financial Group, and so the risk assets held by the group will not immediately decrease.
"In view of these factors, the project will not have an immediate impact on the ratings on the Mizuho banks," S&P said. "Amid prolonged economic stagnation in Japan, concerns remain over the emergence of new bad loans and further deterioration in the business performance of companies to which Mizuho has already provided financial support."
The three Mizuho banks are given a rating of BBB on their long-term debts.