TOKYO (S&P Global Ratings) April 27, 2020--S&P Global Ratings today said it has revised to stable from positive its outlooks on its long-term issuer credit ratings on 14 entities under Mitsubishi UFJ Financial Group Inc. (MUFG), Sumitomo Mitsui Financial Group Inc. (SMFG), Mizuho Financial Group Inc. (Mizuho), and Sumitomo Mitsui Trust Holdings Inc. (SMTH) (see list below). In addition, we have affirmed all our long- and short-term ratings on these companies and their debt issuances.
Our revisions of the outlooks on the 14 companies follow similar actions on the main operating banks of their respective parent groups on April 24, 2020 (see "Outlooks On Japan's Three Major Banking Groups Revised To Stable As COVID-19 Stalls Credit Gains; Ratings Affirmed," and "Outlook On Japan's Sumitomo Mitsui Trust Bank Revised Down To Stable As COVID-19 Stalls Gains; 'A/A-1' Ratings Affirmed," both published April 24, 2020).
S&P Global Ratings assesses the 12 MUFG, SMBC, and Mizuho group entities as core subsidiaries of their groups, based on our view that they will be highly likely to receive extraordinary support from their respective groups when necessary. We equalize the long-term ratings on 11 companies, excluding Mitsubishi UFJ Securities Holdings, with the group credit profiles (GCPs) of each parent group. Our long-term issuer credit rating on Mitsubishi UFJ Securities Holdings is one notch below the long-term issuer credit rating on the parent group's core operating company, reflecting its structural subordination as a holding company.
The outlooks on the 12 entities reflect the outlooks on the major banks in each parent group. We may upgrade the ratings on these entities if we upgrade the major operating banks of their respective groups. On the other hand, we may downgrade these entities if we downgrade the major operating banks of their respective groups or an entity's strategic importance to the group declines, leading to a reduction in the possibility of extraordinary support from the group.
We assess JTC Holdings Ltd., parent company of Japan Trustee Services Bank Ltd. (JTSB) and Trust & Custody Services Bank Ltd. (TCSB), as a strategically important affiliate of the SMTH group. Creditworthiness of the two banks reflects not only the group stand-alone credit profile (SACP) of JTC Holdings but also takes into account the possibility of extraordinary support from the SMTH group through JTC Holdings when needed.
The stable outlooks on JTSB and TCSB reflect the outlook on the SMTH group's core operating bank, Sumitomo Mitsui Trust Bank Ltd. (SMTB), which we rate. We may consider upgrading both banks if we upgrade SMTB or if we revise upward the group SACP of JTC Holdings thanks to improvement in capitalization on a consolidated basis. Conversely, we might consider downgrading both banks if we significantly lower our group SACP of JTC Holdings, but we believe this is unlikely in the next two years.