7 Japanese Banks Downgraded by S

Standard & Poor’s Corp. cut the credit ratings of Daiwa Bank Ltd., Sumitomo Bank Ltd. and five of Japan’s other largest banks, with Daiwa’s counter-party rating dropping to “junk.” The U.S.-based ratings company said Daiwa’s credit costs, and those of the other banks, are expected to increase sharply. “Although the six-month results were generally in line with expectations,” all of Japan’s banks, except Dai-Ichi Kangyo Bank and Fuji Bank, “announced expectations of sharply increased credit costs in the second half of the year,” S&P; said in a written statement. Dai-Ichi Kangyo Bank, Sakura Bank Ltd., Sanwa Bank Ltd., Industrial Bank of Japan Ltd. and Tokai Bank Ltd. had their ratings downgraded. All ratings of Fuji Bank and Asahi Bank Ltd. were affirmed. The cuts are a sign that Japan’s debt-ridden banks are still not out of the woods, despite the launch of the world’s biggest bank bailout and the promise of government money to bolster capital, analysts said. “This downgrade means the ratings company doesn’t appreciate the injections of public money banks have received,” said Yoshihiko Kamata of Nomura Securities Co. “Banks that have their rating cut to BB are in a severe situation.” The cuts affect senior debt, certificates of deposit and counter-party credit ratings.