Bulletin: Aozora Bank's Investment From Daiwa Securities Group Is No Panacea

TOKYO (S&P Global Ratings) May 14, 2024--Aozora Bank's financial flexibility will remain constrained for now. This is even if a capital and business alliance between Daiwa Securities Group and Aozora Bank is realized. S&P Global Ratings believe an alliance would, however, be a first step for Aozora Bank Ltd. (BBB/Negative/A-2) toward improving creditworthiness. Daiwa Securities Group Inc. (BBB+/Stable/A-2) recently announced that it would subscribe to Aozora Bank for a capital increase of ¥51.9 billion in total through a third-party allotment on July 1, 2024, subject to the approval and permission of relevant authorities. This would make Daiwa Securities Group the largest shareholder in Aozora, with an ownership ratio of 15.38%. The bank would become an equity-method affiliate of Daiwa Securities

...May 14, 2024 TOKYO (S&P Global Ratings) May 14, 2024--Aozora Bank's financial flexibility will remain constrained for now. This is even if a capital and business alliance between Daiwa Securities Group and Aozora Bank is realized. S&P Global Ratings believe an alliance would, however, be a first step for Aozora Bank Ltd. (###/Negative/A-2) toward improving creditworthiness. Daiwa Securities Group Inc. (###+/Stable/A-2) recently announced that it would subscribe to Aozora Bank for a capital increase of Ñ51.9 billion in total through a third-party allotment on July 1, 2024, subject to the approval and permission of relevant authorities. This would make Daiwa Securities Group the largest shareholder in Aozora, with an ownership ratio of 15.38%. The bank would become an equity-method affiliate of Daiwa Securities Group. We believe the capital increase would boost the bank's risk-adjusted capital ratio, which we expect to stay around 7% over the next two years or so, by around 90 basis points....

Bulletin