Moody's affirms SMBC ratings; outlook stable

Stocks and Financial Services Press Releases Wednesday October 5, 2011 10:55
Tokyo--5 Oct--Asian Banker

Tokyo, October 5th 2011 - Moody's Japan K.K. has affirmed the rating and stable outlooks - C Bank Financial Strength Rating, A3 Baseline Credit Assessment, Aa3 long-term bank deposit ratings, Aa3 long-term issuer rating, Aa3 senior unsecured debt ratings, A1 senior subordinated debt ratings, A2 (hyb) junior subordinated debt ratings, and Prime-1 short-term ratings -- of Sumitomo Mitsui Banking Corporation (SMBC).

The ratings affirmation follows Sumitomo Mitsui Financial Group (SMFG)'s announcement that SMFG would turn Promise Co., Ltd. (Promise) into a wholly-owned subsidiary in or around April 2012.
The affirmation and stable outlook reflect Moody's view that this event should not substantially affect SMBC and SMFG's standalone financial strength.

The main reasons are: (1) the limited immediate negative impact on SMFG's capital and profits from turning Promise into a wholly-owned subsidiary and providing additional capital injections to Promise, (2) Promise's projected net loss for FYE3/2012 will be mostly tied to overpaid interest claims and claims in future will be well provisioned by the company at least for the short-term period, and (3) SMFG and SMBC will have sufficient financial flexibility to absorb further rise in loan losses at Promise , even if the losses associated with overpaid interest claims are more than the projected loss reserve at Promise.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The principal methodologies used in this rating were Moody's Bank Financial Strength Ratings: Global Methodology, Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology, and Moody's Guidelines for Rating Bank Hybrid Securities and Subordinated Debt, published on September 30, 2010, and available on www.moodys.co.jp.

Sumitomo Mitsui Banking Corporation, headquartered in Tokyo, is one of Japan's megabanks.
--www.theasianbanker.com (October 5 2011)--

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