Moody's: Resona on review for upgrade

Moody's Investors Service said it placed the ratings, including the Ba1 senior unsecured debt rating, of Resona Bank Ltd., and the ratings of Saitama Resona Bank on review for possible upgrade.

However, the Caa1 preferred stock rating of AB International Cayman Trust and the ratings of Resona Trust & Banking Co. Ltd. (A3/Prime-1 deposit ratings) are not affected by the review, and will maintain their stable outlooks.

Moody's said the rating action reflects Moody's increased confidence in Japan's regulatory support mechanism of Japanese banks. This was evident in the large injection of government capital to Resona Bank, and the effectively authorized use of injected capital to accelerate balance sheet problems of not only Resona Bank but also those of its sibling regional banks.

The regulatory support was also made in the form of the flexibility granted in the continued servicing of the interest of junior subordinated debts of Resona Bank, and accordingly, many different classes of creditors were consequently supported.

As a result of this recapitalization, Resona Holdings is now almost 80% effectively owned by the government and was able to substantially accelerate its balance sheet risk reduction.

Furthermore, the rating review is also prompted by recent Resona Holding's official announcement of its revised rationalization plan.

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