March 28, 2017 / 6:57 AM / a year ago

Fitch Assigns 'A-' Rating to Sumitomo Mitsui Trust Bank (U.S.A.)

(The following statement was released by the rating agency) TOKYO, March 28 (Fitch) Fitch Ratings has assigned Sumitomo Mitsui Trust Bank (U.S.A.) Limited (SMTBUSA) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) of 'A-'. The Outlook is Stable. The agency has also assigned the company Short-Term Foreign- and Local-Currency IDRs of 'F1' and a Support Rating (SR) of '1'. SMTBUSA, a New Jersey State chartered trust and banking company insured by the Federal Deposit Insurance Corporation, is a wholly owned subsidiary of Sumitomo Mitsui Trust Bank, Limited (SMTB; A-/Stable/F1/a-). KEY RATING DRIVERS SMTBUSA's IDRs are aligned with those of its parent. This together with the SR reflect Fitch's view that its parent SMTB and its ultimate holding company Sumitomo Mitsui Trust Holdings, Inc. (SMTH) would be extremely likely to extend the subsidiary support in a timely manner, if required. Fitch believes SMTBUSA's role in the group of supporting its global custody business, and the high degree of operational integration, including management oversight and branding, underlines the parent's strong commitment to SMTBUSA. SMTBUSA acts as the central base of the group's global custody services and provides custody of securities in foreign markets and related services, such as securities lending to mainly Japanese institutional investors and their related entities. SMTBUSA's failure, if such an event occurs, would lead to some disruption in the group's global custody operations. RATING SENSITIVITIES SMTBUSA's IDRs would be directly affected by changes to SMTB's IDRs, which are currently underpinned by the Viability Rating (VR) of 'a-'. Negative rating action on the VR is currently not envisaged due to its stable asset quality and adequate capital buffers. However, the VR may be negatively affected if an unexpected deterioration in the operating environment, such as increased uncertainty or failure of Abenomics, adversely impacts the bank's financial profile. Downward pressure may also result from a substantial increase in risk appetite (without corresponding increase in risk buffers) or higher volatility in earnings and capital. Negative rating action on SMTB's VR would not change its IDRs should its Support Rating Floor remain at 'A-'. The Support Rating Floor is sensitive to Japan sovereign rating (A/Negative). SMTBUSA's SR and IDRs could be downgraded if its functions within the group were to be substantially revised and Fitch no longer viewed its position within the group as core and integral. Also, a decrease in SMTB's propensity to support its subsidiary, including due to a material reduction in ownership and management oversight, would likely result in a review of SMTBUSA's SR and IDRs. Positive rating action on SMTB's VR is unlikely to occur in the absence of sustained improvement in the wider domestic real economy, with sound growth in demand for capex and investments. Fitch does not assign a VR to SMTBUSA as its operation is highly integrated with the parent's business. Contact: Primary Analyst Kaori Nishizawa Director +81 3 3288 2783 Fitch Ratings Japan Limited Kojimachi Crystal City East Wing 3F 4-8 Kojimachi, Chiyoda-ku, Tokyo 102-0083 Secondary Analyst Naoki Morimura Director +81 3 3288 2686 Committee Chairperson Mark Young Managing Director +65 6796 7229 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: Additional information is available on Applicable Criteria Global Bank Rating Criteria (pub. 25 Nov 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=1021186 Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. 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