The merger tidal wave washing over the nation's banking industry is propelling American banks toward the top ranks of global financial institutions in the eyes of investors.

Had its merger with NationsBank Corp. already been in place, BankAmerica Corp. would have ranked as the world's largest financial services company in market capitalization on March 31, according to a newly devised American Banker survey.

The new BankAmerica's pro forma market value of $134.5 billion would have put it just ahead of Citigroup, the pending combination of Citicorp and Travelers Group, which has a pro forma value of $133.8 billion.

The new Banc One Corp., with a pro forma market value of $62.8 billion after its planned combination with First Chicago NBD Corp., would have ranked 10th worldwide.

In all, the survey found, U.S. financial services companies-including mortgage titan Fannie Mae and insurer American International Group-held five of the top 10 spots worldwide at the end of the first quarter. And they accounted for 46 of the top 100 companies. (Complete results appear on page 11.)

"You would have to go back to an earlier era, probably at least the postwar '50s," to find such U.S. prominence, said Raphael Soifer, banking industry analyst at Brown Brothers, Harriman & Co., New York.

The ranking, an addition to American Banker's repertoire of industry surveys, is unusual in its scope, crossing all national and industry boundaries. It takes in not only commercial banks and thrifts but also insurers, brokerages, real estate concerns, finance companies, and trading firms. American Banker plans to update the ranking periodically.

In focusing on market value, the survey reflects the increased importance that companies worldwide are attaching to stock market performance.

"For decades the chart that bankers first turned to was the one listing size of assets," said Sir Brian Pitman, chairman of Lloyds TSB Group PLC, London, at the recent International Monetary Conference in Vienna. "Yet to have the largest volume of assets-and risk-is not synonymous with leadership.

"If world-class means anything, it means delivering world-class performance in value creation," he said.

U.S. institutions posted strong showings in the survey as a result of this country's robust economy and surging stock market. European and Australian institutions also fared well.

But not Asian banks and financial companies. That region's ongoing economic trauma, underlined by plunging currency values, clearly has caused disheartened investors to cut their support.

"There are really two pieces to this story," Mr. Soifer said. "First, there is the growing clout of these merged U.S. institutions and then there is Japan." That nation's once world-dominant banks are now deeply troubled.

The change in fortune was dramatically illustrated by the drop in rank of Bank of Tokyo-Mitsubishi Ltd. from No. 1 just a year ago to 11th place at March 31.

Bank of Tokyo's market value at the end of the first quarter-which is also the fiscal yearend in Japan-fell to $56.8 billion, a 23% drop from a year earlier.

Not adjusting for recently announced mergers, the global leader of the financial services sector at the end of the first quarter was New York- based American International Group, valued by investors at $95.7 billion.

The next U.S. concern, NationsBank alone, was in fourth place. Travelers, Citicorp, and BankAmerica ranked eighth, ninth, and 10th, respectively, while Chase Manhattan Corp. was 12th and First Union Corp. 14th.

Changes in market value of non-U.S. companies are the result of shifts in both stock prices and currency values.

The United States was headquarters for 46 financial services companies among the top 100 worldwide at March 31, while Japan still ranked second with 12 institutions.

Twenty-five companies based in Europe reached the top 100 - 11 in the United Kingdom, seven in Germany, five in Switzerland, two each in Spain and France, and one in Italy.

Among European institutions, the top company was Lloyds TSB. It ranked second among all financial companies and was the top banking company.

"Lloyds TSB is a very well-run bank," Mr. Soifer said. "It earns 40% on equity under U.K. GAAP (generally accepted accounting principles). That would equate to around 27% or 28% here, which is still better than any other large bank I know.

"But the price is another story," Mr. Soifer said. "Its stock trades at about six times book value in U.S. terms," he noted. Lloyds ranked as Britain's fourth-largest bank, with yearend 1997 assets of $243 billion.

Financial institutions from Down Under also rate highly with investors. National Australia Bank Ltd., Melbourne, ranked 15th with $46.4 billion of market value. Three other Australian banks were also in the top 100.

Worldwide, there were 60 banks among the top 100 financial institutions, 28 insurers, eight financial and trading firms, two real estate firms-both Asian-and one thrift and one brokerage-both based in the U.S.

The thrift was Washington Mutual Inc., Seattle, in 57th place with value of $18.4 billion. The brokerage was Morgan Stanley Dean Witter, New York, in 17th place with $43.8 billion of market capital.

The U.S. was also home to the top finance company in market cap-Fannie Mae of Washington. Investors valued Fannie Mae at $71.4 billion, putting it in the seventh spot worldwide.

The survey was based on the most recent data available for matching comparable figures among international companies.

On a pro forma basis, the survey's March 31 lineup would be remade by the dealmaking surge among banks. The consolidated UBS and Swiss Bank Corp. and the combined Banc One Corp. and First Chicago NBD would move into the top 10 group, ranking ninth and 10th. And the new Wells Fargo & Co., merged with Norwest Corp., would be just behind, in the 11th spot.

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