THOMSON BankWatch has lowered the issuer rating of Daiwa Bank from D to D/E and its short-term rating from TBW-2 to TBW-3. 'Daiwa faces not only the significant direct financial ramifications of the fraudulent trading losses from its New York operations, but also the extremely damaging blow to its reputation in light of the serious questions relating to the bank's internal controls and managerial accountability,' Thomson BankWatch said. Daiwa had announced plans to meet sanctions imposed by US and Japanese regulatory authorities, including its US businesses, and to reduce other international operations. Thomson said the confidence loss would be a severe impediment to the development of new business 'and indeed even in maintaining existing relationships'. 'While support for Daiwa from the Japanese regulatory authorities is unquestioned in our opinion, Daiwa's restructuring efforts may require some form of outside assistance,' Thomson BankWatch said.