Deutsche Bank toppled Sanwa Bank Ltd. at the end of last year as the world's largest bank.

The condition, reflected in American Banker's annual international rankings that begin on page 8, was only temporary. Subsequent to the yearend 1995 calculations, Bank of Tokyo merged with Mitsubishi Bank Ltd. to create a $711 billion-asset colossus that leaves Frankfurt-based Deutsche Bank trailing by more than $200 billion.

But the Dec. 31 snapshot was indicative of Japan's banking industry problems and general economic weakness.

Meanwhile, Deutsche Bank was riding an accounting change, an 8% appreciation in the German mark, and an aggressive growth strategy - its acquisitions included ITT Commercial Finance Corp. in St. Louis - to boost assets by 36.5% and its world ranking by 10 places.

It was the first time since 1982 that the No. 1 bank was not Japanese.

Japanese banks managed to hold down Nos. 2-8, with Credit Agricole Mutuel of France and HSBC Holdings of Britain and Hong Kong rounding out the top 10.

Citicorp, the highest-ranking U.S. bank at the end of 1994, at No. 26, fell two places in 1995, which it ended with $255 billion of assets. With $230 billion of assets, BankAmerica Corp. was in 35th place, one spot lower than in 1994.

Chase Manhattan Corp., after its March 31, 1996, merger with Chemical Banking Corp., vaulted past Citicorp and into the world top 20 on a pro forma basis. Its $302 billion of yearend 1995 assets would have placed it 19th.

Citicorp's Citibank was last among the top 20 world banks in 1986, when it ranked ninth.

Though asset size has lost its historical importance as a success measure for bankers and analysts, the number is still seen as a valid yardstick of heft and status, said

Nick Collier, an analyst with J.P. Morgan in London.

Circumstances favored European banks in 1995. Credit Agricole climbed to ninth place from 15th after an 8.6% rise in the French franc against the dollar.

Union Bank of Switzerland jumped to 14th place from 32d, and Dresdner Bank of Germany to 15th from 25th, after accounting for changes, acquisitions, and currency fluctuations.

Assets declined at the big Japanese institutions.

Though this was partly caused by cutbacks in balance sheets in the wake of pressure on Japanese bank capital, the biggest factor was a 17% decline last year in the value of the yen against the dollar.

Had the dollar not strengthened as much, some Japanese banks could have posted slight asset increases. But even with their troubles, the Japanese banks still controlled 56% of the assets of the world's top 25 banks.

Aggregate numbers of employees and branches among the top 25 edged downward - the employment figure by 1.2%, to 748,278, and branches by 1%, to 30,324.

HSBC Holdings, parent of Hongkong & Shanghai Banking Corp., Midland Bank of London, and Marine Midland Banks in the United States, was the biggest bank employer, at 101,000 people. Credit Agricole was next, with 74,380, and Deutsche Bank had 74,119.

French and German banks had the largest number of branches, both absolutely and in proportion to their assets. Paris-based Credit Agricole, the No. 10 institution with $384 billion of assets, had over 8,000 branches, which was more than double the number of the 12th-largest bank, $337 billion-asset Credit Lyonnais.

The greatest contrast was with $291 billion-asset Westdeutsche Landesbank of Germany, 22d in the world, with only 11 offices.

Japanese banks tend to have far fewer branches than the leading European networks. Norinchukin Bank, a $429 billion-asset institution, had only 43 branches, while $500 billion-asset Sanwa Bank had 405.

David Marsh, an international banking analyst with the credit rating agency IBCA Ltd. in London, attributed the relatively low Japanese branch numbers to the population density in Japan and the major banks' longstanding emphasis on wholesale, rather than consumer, banking.

"Japanese city banks are similar to money-center banks in that they tend to borrow a lot of their funds on interbank markets and don't have large infrastructures for gathering deposits," Mr. Marsh said.

"It's in the nature of the system," added Gary Kleiman, a Washington- based international banking expert. "Unlike the European nationwide banks that dominate their systems with branches on every corner for commercial as well as political reasons, Japan's big city banks predominantly serve a corporate rather than retail clientele."

John Kimelman contributed to this article.

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