Standard & Poor's cut its rating on Norinchukin Bank, saying asset-backed securities are eroding the lender's capital base and discounting any significant lift from a plan to raise ¥1 trillion in funds.
Norinchukin, the central bank for Japan's agricultural cooperatives, had its fundamental strength rating lowered one level to C+ from B, the ratings company said in a statement Thursday.
S&P didn't change its ratings on Norinchukin's debt.
The Tokyo-based bank's risk related to asset-backed securities has probably increased, the ratings company said. Norinchukin's fundraising plan won't boost its capital strength because it is seeking to raise the money from its members, effectively a transfer of capital within a single organization, according to S&P.
"The recent turmoil in the global financial markets has increased the risk volume of its assets and put material pressure on the bank's Tier 1 capital," the ratings company said.
Norinchukin's Tier 1 capital, a measure of financial strength, stood at ¥2.2 trillion as of Sept. 30, according to S&P's statement. The bank had ¥32.9 trillion in securities on its balance sheet, equivalent to 3.7 times the company's ¥8.8 trillion in lending, the statement said.