Bank-level ratings are becoming increasingly important to investors, the rating agencies say.

In the past few years, billions of dollars of debt securities have been issued at the bank level instead of the holding-company level.

"This has given banks the opportunity to save on FDIC insurance premiums and borrow at slightly lower rates," said Glen Grabelski, an analyst for Standard & Poor's Corp.

Typically, banks are rated one notch higher than their holding companies, and this enables the former to borrow at cheaper rates. The funds raised are not insured, so no premiums have to be paid on them.

Michael Starr, vice president at Duff & Phelps/MCM Investment Research Co., said the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 has also increased the need for investors to be aware of bank-level ratings.

Cross Guarantees

The statute mandates "cross guarantees" - that is, the holding company must provide financial support to all of its bank subsidiaries. Thus, regulators have access to all of a holding company's assets if a bank fails.

Mr. Starr said this has caused holding companies to push more of their operating units to the bank level.

"Regulations have made the holding company an ineffective institution," he added. "Investors see little strength in the holding company. They want to be close to the cash."

An emerging issue at the rating agencies is whether to assign separate ratings to different bank subsidiaries.

At present, Standard & Poor's rates all of a holding company's banks the same. Mr. Grabelski said the agency is looking at the issue of separate ratings.

Mr. Starr said Duff & Phelps already assigns different ratings to units of NationsBank Corp. and First Interstate Bancorp.

"Generally, where there is a meaningful difference in financial strength, we will differentiate between subsidiaries," he said.

The rating agencies took the following actions last week:

Anchor Bancorp: Moody's Investors Service Inc. assigned a Ba3 rating to senior notes issued to the Federal Deposit Insurance Corp. in partial exchange for outstanding preferred stock.

Moody's said the rating reflects concerns about the company's relatively short history of core earnings and its undeveloped lending business.

Moody's said asset quality is good, a result of the thrift's large investment in high-quality mortgage-backed securities. Capital was strengthened through the recent sale of $72 million in common Stock.

BankSouth Corp.: Moody's upgraded subordinated debt from B2 to Ba3 and assigned Baa2 to long-term deposits and Prime-2 to short-term deposits issued by the subsidiary Bank South.

Moody's said the upgrade reflects the lifting of regulatory agreements with the Office of the Comptroller of the Currency and the Federal Reserve Bank of Atlanta. The agency said Bank South has improved asset quality, earnings, capital levels, and liquidity.

Moody's analysts expressed concern about Bank South's ability to compete with superregional banks in Georgia but added that a recent agreement to acquire the Atlanta banks of Barnett Banks in exchange for Bank South's Pensacola, Fla., operations will enhance its competitive position.

Barnett Banks Inc.: Standard & Poor's revised the company's rating outlook to "stable" from "negative." At the same time, the agency affirmed senior debt at A-minus, subordinated debt at BBB-plus, and preferred stock at BBB.

The A/A1 ratings for certificates of deposit and letters of credit issued by Barnett Bank of South Florida and Barnett Bank of Jacksonville were also affirmed.

"The outlook revision reflects Barnett's success in boosting core profitability by attaining sizable cost savings from the merger with the former First Florida Bank," S&P said.

It said the company has closed overlapping branches, reduced the payroll, consolidated back-office systems, and sold real estate.

Citicorp: Moody's raised senior debt to Baa1 from Baa2 and subordinated debt to Baa2 from Baa3. Commercial paper was upgraded to Prime-2 from Prime-3, cumulative preferred stock to Baa2 from Bal, and noncumulative preferred stock to Baa3 from Ba2.

Moody's said the upgrade reflects its expectation that earnings will continue to improve because of better asset quality.

Future upgrades will depend on progress in reducing commercial real estate, boosting capital, and removing the current memorandum of understanding with regulators, Moody's said.

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