Moody's Investors Service yesterday placed the triple-A credit rating of Credit Suisse on review for possible downgrade, the first time a major rating agency has ever characterized one of the three major Swiss banks as less than top-notch.

A downgrade would affect about $1 billion in municipal debt backed by Credit Suisse letters of credit, according to Moody's. In a statement, Moody's gave a generalized rationale for the negative review, saying only that Credit Suisse is suffering from "the increasingly competitive banking environment in Switzerland and abroad."

The review applies only to the long-term Aaa; all of the bank's short-term ratings were confirmed at Prime-1.

A spokesman for Credit Suisse took strong exception to the notion that the bank is anything less than Aaa. "We are very much surprised by the Moody's announcement," the spokesman said. "They gave no reason as to why they are taking us under review."

Credit Suisse is the smallest of the "big three" Swiss banks, but the bank spokesman said size is not an issue in either domestic or foreign markets. "Our competitive posture is exceptionally strong," he said. "We had a very strong nine months and anticipate a record year" for earnings in 1991.

The other two major banks in Switzerland are Union Bank of Switzerland and Swiss Bank, both of which have triple-A ratings.

In fact, Credit Suisse yesterday reported its assets grew by 7.6% in the first nine months of the year, to 161 billion Swiss francs, or about $109 billion.

Sources in the municipal letter-of-credit industry and at other rating agencies were baffled by the possible downgrade of Credit Suisse, especially by the notion that a competitive environment would harm only one bank.

Municipal market participants raised the possibility that Credit Suisse's ownership stake in First Boston Corp. may have contributed to the Moody's action, but the Credit Suisse spokesman said any such suggestions are "totally unwarranted." CS Holdings Inc., Credit Suisse's parent, owns 60% of First Boston.

John J. Kriz, the vice president at Moody's who initiated the review, did not return phone calls yesterday.

Both the Swiss government and economy are considered stable, and strict regulation in Switzerland ensures capital levels that exceed the risk-based guidelines put forth by the Bank of International Settlements. In addition, Swiss banks have hidden equity in their real estate holdings and traditionally have steered clear of high-risk transactions such as leveraged buyouts or loans to Latin America.

Still, the economy has not been ideal for banks within Switzerland's neutral borders, according to Oliver Adler, senior economist at Union Bank of Switzerland. "The economy is not in great shape," Mr. Adler said. "We've had two quarters of slightly negative growth, and certain things are particularly negative for banks."

The salient problem is a three-year-old inverted yield curve, which is causing an "enormous squeeze" on banks' funding, he said. Saddled with long-term mortgages at an average historical rate of about 6%, banks are having to borrow in the short-term market at about 9%.

"It means [the banks] have to move out of their traditional businesses like mortgages ... into trading or other off-balance sheet activities," Mr. Adler said.

He noted, however, that Swiss banks are "universal" institutions capable of participating in any financial activity, so moving from one line of business to another is relatively easy.

And Mr. Adler sees a rather bright light at the end of a short tunnel. "We expect to see markedly lower inflation and interest rates by the middle of next year, and for the central bank to ease," he said. "So the pressure on banks will be off by the end of the next year."

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