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Fitch affirms ratings of Shizuoka Bank, SURUGA bank

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Fitch affirms ratings of Shizuoka Bank, SURUGA bank

Fitch Ratings said July 12 that it affirmed the ratings oftwo Japanese regional banks, Shizuoka Bank Ltd. and

The rating agency affirmed Shizuoka Bank's long-term foreignand local currency issuer default ratings at A, short-term foreign and localcurrency issuer default ratings at F1 and viability rating at "a."The outlook on the bank's long-term ratings is negative.

Meanwhile, the rating agency affirmed SURUGA bank'slong-term foreign and local currency issuer default ratings at A-, short-termforeign and local currency issuer default ratings at F1 and viability rating at"a-." The outlook on the bank's long-term ratings is stable.

The rating agency said the two regional banks, like otherbanks in Japan, continue to face a challenging operating environment, includingrising uncertainty over the sustainability of government efforts to stimulateeconomic growth and competitive pressures.

The negative outlook on Shizuoka Bank's ratings reflect theconstraint of its viability rating being rated equal to that of Japan'ssovereign rating. The stable outlook on SURUGA bank's ratings is based onFitch's view that harsh credit cost rises will not crystallize and the bank'scredit profile will be supported by adequate risk controls and buffers.

Fitch may downgrade Shizuoka Bank's viability rating if thesovereign rating is downgraded, while an upgrade could result from sustainableloan expansion and faster internal capital generation without a large increasein risk appetite.

SURUGA bank's ratings and outlook are constrained by theJapanese sovereign's ratings. Both banks' viability ratings and issuer defaultratings may be downgraded if there is substantial deterioration in theoperating environment.