Japanese Banks Find Few Limit Problems Despite Bad News; Good Ratings Are Key

Despite the avalanche of bad news concerning capital adequacy and profitability of Japanese banks, so far neither the interbank or the corporate foreign exchange markets seem to have cut their lines to the Japanese in recent weeks, discussions with major market participants reveal. But a further drop in the Nikkei index that would trigger downgrades in official credit ratings as capital ratios drop in tandem would result in quite a different picture, some observers suggest.

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