Japanese banks and businesses are unhappy with the way Western ratings agencies have been treating them, and have decided to fight back by rating the raters.

The Japan Center for International Finance is preparing a study of ratings agencies, including Moody's Investors Service and Standard & Poor's, to be released in the spring, according to several rating agencies that are subjects of the study.

But the agencies said they doubt the Japan Center will be objective because is not completely independent from the institutions it surveys.

The study's stated aim is to rate the agencies' accuracy, but sources said the center is really trying to show that the agencies are treating Japanese businesses unfairly.

The Japan Center declined to comment for this story.

Japanese banks contend that Western ratings agencies are unfamiliar with Japanese culture and business methods and that their ratings do not reflect the actual economic health of the institutions surveyed.

More importantly, the Japanese institutions say that a number of recent rating downgrades are worsening the credit crunch by increasing the cost of interbank lending.

"Some Japanese people mistakenly say that the economic crisis was triggered by" the ratings agencies, said Hiro Ito, a research associate with the Washington-based Economic Strategy Institute.

In spite of the fact that some recent bank failures were sparked by the agencies' downgrades-which induced a short-term liquidity crisis because of difficulties in borrowing money-the banks would have failed anyway, Mr. Ito said.

"It is widely agreed that Moody's and S&P's ratings are too strict," said Mr. Ito, who specializes in Japan's financial sector. "But at the same time, Japanese rating firms are too lenient." He added that most Japanese rating agencies are affiliated with major banks.

Moody's had questions about the Japan Center and about its objectivity and aims. The ratings agency "wanted to ensure that (the Japan Center)'s study would be transparent and objective," said Robert Becton, a Moody's spokesman. So far the agency has not received a response from the center.

Specifically, Moody's said the Japan Center has not disclosed the names of its sponsors or its board members. Furthermore, "given the public comments made by JCIF on previous occasions, Moody's questions the capability of JCIF to be objective in its evaluations," the agency said in a written statement.

This much is known: Established in 1983 with the support of the Ministry of Finance of Japan and Bank of Japan, the Japan Center has a membership that includes most major Japanese financial institutions.

Members of its board include top executives at major Japanese banking, insurance, and securities firms.

An S&P spokeswoman described the agency's relationship with the Japan Center as "cordial and cooperative."

Moody's downgraded five major Japanese banks in May and placed several others on review for possible downgrade. In October the agency placed nine more banks on review for possible downgrade, including four powerhouses- Bank of Tokyo-Mitsubishi Ltd., second-largest in the world in asset size, Sanwa Bank Ltd., Sumitomo Bank Ltd., and Industrial Bank of Japan Ltd.

In the past 12 months Moody's has downgraded or placed on review for possible downgrade its ratings for virtually all Japanese banks, said Rieko McCarthy, a bank analyst.

At the end of November, S&P followed suit and placed the ratings of nine Japanese banks on review for possible downgrade. The banks included the four major ones mentioned above, plus Asahi Bank Ltd., Dai-Ichi Kangyo Bank Ltd., Daiwa Bank Ltd., Sakura Bank Ltd., and Tokai Bank Ltd. Ms. Chapman is editor of International Banker, an American Banker newsletter.

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