Fitch Ratings has lowered its outlook to negative on a bunch of Japanese banks following its recent decision to cut the outlook of the country itself.

The rating agency revised down its outlook on banking groups such as Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, Mizuho Financial Group and Shizuoka Bank. Securities house Nomura Holdings’ outlook was also lowered to negative.

Fitch said a high exposure to Japanese government bonds at Mitsubishi, Sumitomo and Shizuoka “makes them unlikely to avoid failure in the event of a sovereign default even though their intrinsic profiles otherwise remain broadly stable”.

For Mizuho and Nomura, concerns were raised over the “weakening ability” of the Japanese government to support the lenders as the institutions’ issuer default rating were dependent on government support.

Meanwhile, Sumitomo Mitsui Trust Bank and Suruga Bank, a regional bank, were able to retain Fitch’s stable outlooks as they “remain unconstrained by the sovereign rating,” the ratings agency said.

Later in the day, Fitch also revised down the outlook of 11 Japanese insurers to negative from stable, including big houses such as Tokio Marine & Nichido Fire Insurance, Sompo Japan Nipponkoa Insurance and Nippon Life Insurance.

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