Mergers and foreign exchange fluctuations reshuffled the rankings of the world's top 25 banking companies last year, according to an American Banker survey.
Bank of Tokyo-Mitsubishi Ltd., the product of a merger of two Japanese giants, wrested the top spot from Frankfurt-based Deutsche Bank AG. The German bank slipped to second place, while France's Credit Agricole Mutuel climbed to third from ninth after acquiring Paris-based Banque Indosuez.
Chase Manhattan Corp., which merged with Chemical Banking Corp. last year to become the largest U.S. banking company, occupied 16th place in the word rankings at yearend 1996. In 1995, Chase had ranked 62d and Chemical, 46th.
Meanwhile Citicorp, a company that has watched the merger frenzy from the sidelines, climbed three notches, into 25th place, after a $23 billion increase in assets, to $279 billion. It was the only U.S. bank besides Chase to make the top 25.
And bankers and analysts alike said they expect more reshuffling in the years ahead as banks in the United States and abroad continue to find partners for their persistent quest to shed overcapacity and achieve efficiencies.
"Consolidation has much further to go," said Brent Erensel, a banking analyst at UBS Securities LLC in New York.
The observers also noted that even in markets like Switzerland, Canada, Britain, France, and Holland, where banking is already highly concentrated among a handful of institutions, consolidation is continuing as competition intensifies and financial markets integrate.
"Most advanced nations have between 15 and 75% of their banking systems dominated by three or four banks," Mr. Erensel said. "Ultimately, most countries will move toward that."
"We realize that a shakeout will be necessary," said Jaap J. Kamp, senior executive and vice president at Amsterdam-based ABN Amro Bank, at a recent banking conference in Frankfurt. "We can't have hundreds, or thousands, of market participants."
Mr. Erensel and others cited deregulation, technology, a need for global management, intense competition, and the stimulating effect of one big merger as among principal factors behind consolidation.
"Mergers beget more mergers," Mr. Erensel said.
But Gary Kleiman, head of Washington-based Kleiman International Consultants Inc., also noted that consolidation is moving in new directions as banks acquire investment banks and asset management firms to build expertise in specialized domains. He also noted that global mergers are gaining momentum as banks build worldwide networks.
"Banks are moving cross border and beyond lending," Mr. Kleiman said. "This is the next big phase of consolidation."
One of the most dramatic trends that emerged from the survey was a drastic decline in assets at Japanese banks as a result of large writeoffs of problem real estate loans and strong appreciation of the dollar, which rose from 88.4 yen at yearend 1995 to 106.5 a year later.
As a result, asset totals fell at all the top Japanese banks.
Acquisitions and currency fluctuations had an equally strong impact on the rankings of European banks.
During 1996, the German mark and French franc fell 6.8% and 5.4%, respectively, against the dollar. In contrast, the British pound gained more than 16%, boosting the rankings of London-based Barclays PLC by 29 notches, to 18th place, and Natwest Group by 27 notches, to 19th place.