Pending megamergers will put two U.S. banking companies among the world's top 10, a distinction no domestic institution has had in a decade.
An American Banker survey of world banks based on yearend 1997 figures indicates that Citigroup, the combination of Citicorp and Travelers Group that may be consummated as early as next month, would rank second in the world, with $697.5 billion of assets.
The newly created UBS banking group of Switzerland would be a mere $1 billion larger. And Citigroup may overcome that gap because of declines in the value of the Swiss franc versus the dollar.
BankAmerica Corp., including the assets of merger partner NationsBank Corp., would rank fifth, with $572 billion of assets.
The last time Citicorp was in the top 10 was at yearend 1987, when its $198 billion of assets placed it tenth.
San Francisco-based BankAmerica's last appearance in the top rungs was at yearend 1984, when it was fifth, at $113.7 billion.
Balance-sheet size may have lost its historical importance in the eyes of bankers and industry analysts, who in recent years have paid more attention to profitability measures and market capitalization.
But assets are still seen as indicators of an institution's heft and reach - and may, in aggregate, reflect the global stature of a given country's or region's banking system.
Analysts said that as U.S. banks take prominent positions on the international stage, they have gotten big enough in such businesses as loan syndication, custody, asset management, and some retail operations to assert a competitive advantage.
"You need size to get market position and to get enough business to support global networks," said Raphael Soifer, a banking analyst with Brown Brothers Harriman.
This is especially true in retail banking, where large volumes are needed to get full returns on technology and other costs, analysts said.
"Size does count for something in certain parts of the banking business," said David Berry, an analyst with Keefe, Bruyette & Woods Inc. "Once you've got your systems in place, you can spread your costs over a very broad base."
This "both permits and encourages" bigness, he said.
As U.S. banks have risen in the asset rankings, Japanese banks declined. Their assets, calculated in dollars, declined because of a fall in the value of the yen and cutbacks in their capital-constricted balance sheets.
Taking into account pending as well as completed mergers, Bank of Tokyo Mitsubishi Ltd., Sumitomo Bank Ltd., and Fuji Bank Ltd. were in the top 10 at yearend 1997. A year earlier seven of the 10 were Japanese, and a decade ago Japanese institutions occupied eight of the 10 spots.
European banks took four of the top 10 positions in the latest survey, also because of merger activity. Bayerische Vereinsbank of Germany climbed into seventh place as a result of its pending merger with Bayerische Hypotheken und Wechsel-Bank.
Analysts said the return of U.S. banks is evidence that the world is becoming increasingly divided between very big institutions and smaller, more focused ones. Though analysts tend to judge the growing size of U.S. banks favorably, some caution that management capabilities become increasingly crucial and do not come automatically.