With bank asset declines in Japan offsetting gains in North America and Europe, the world's top 100 banks last year posted their slowest growth in more than 10 years, an American Banker survey has found.

The group's assets climbed just 0.5% during the year, to $21.3 trillion. By contrast, assets rose 6.5% in 1996 and by 15% as recently as 1994. (Complete tables start on page 20.)

The slowdown, analysts say, underscores some fundamental changes in the way global banks do business. Although these institutions are bulking up through mergers, they are increasingly are looking to move loans off their books and into the capital markets.

"Flat assets at international banks is largely a function of securitization," said Nancy Bush, a banking analyst with Ryan, Beck & Co.

Deposits, meanwhile, continued a decline, falling 7%, to $14.4 trillion. Analysts called that a further indication of a flight of consumer savings out of banks into other investments.

The data, amassed by surveying each bank on yearend data, showed precipitous falls in assets among Japanese banks. The drops reflect both real estate lending woes and a fall in the value of the yen against the dollar.

With capital accounts shrinking, assets fell 41% at Daiwa Bank, 19.5% at Nippon Credit Bank, and 18.7% at Long Term Credit Bank of Japan.

By contrast, mergers propelled asset growth of 78% at Bank Austria AG,72.3% at Dexia Belgium, 72% at Holland's ING Bank, and 43% at NationsBank Corp., the survey showed.

Most big U.S. banks posted more moderate increases in their assets, as many gravitated toward fee-based businesses rather than lending. Chase Manhattan Corp., the largest in the U.S., posted a 9.5% increase in assets, to $365.5 billion, while Citicorp's increased by 11.5%, to $311 billion.

Such restrained growth, however, has not hurt stock prices. Indeed, the survey found that U.S. banks grabbed five of the top 10 positions in market capitalization-and 22 of the top 50 spots-as of June 30.

That showing is in line with a worldwide market capitalization ranking published by American Banker in June.

That ranking-taking in all types of financial services companies-showed American companies grabbing six of the top 10 positions.

The strong market values, analysts say, has sharply increased the possibility that major U.S. banking companies with international ambitions- including Citicorp, Chase Manhattan, and BankAmerica Corp.-will make acquisitions overseas, especially in Europe.

"U.S. banks are now in a much stronger position to expand globally," said David Berry, research director at Keefe, Bruyette & Woods Inc.

"There is a very high degree of probability that American banks will use their capitalizations to acquire European banks," added Richard Bove, a banking analyst with Raymond James & Co., St. Petersburg, Florida.

Given the financial crises in Asia and difficulties European banks have encountered in lending to Russia, the gap between U.S. and foreign bank valuations-British and Canadian banks excepted-is likely to widen, Mr. Bove said.

The rich capitalizations, analysts said, also help U.S. banks to fund operations at a lower cost and build up their equity bases further by issuing more stock. Mounting problem loans and declining capital at Japanese banks, meanwhile, is forcing those institutions to pay a substantial premium for borrowed funds.

"The bottom line is that this is an industry that functions on capital, and having a lower cost of capital is an enormous advantage," Mr. Bove said. "The stronger your equity base is, the more debt you can put out, and the more loans you can make, the faster you can grow at a lower cost."

NationsBank, the top U.S. bank in terms of the market value of outstanding common stock as of June 30, came in third worldwide, at $73.9 billion. UBS Corp. of Switzerland was No. 1, followed by Lloyds TSB Group of Britain.

Both of those institutions are now as well positioned as U.S. banks to make additional acquisitions, observers said.

Citicorp ranked fourth worldwide, at $67.4 billion; Chase was sixth, at $64.3 billion; BankAmerica eighth, at $59 billion; and First Union Corp. ninth, at $58.7 billion.

Banks from Switzerland, Japan, Australia, Germany, the United Kingdom, Canada, and Spain helped fill out the top 50.

The U.S. banks have risen in world standings thanks to the extended bull market, industry consolidation, and the recent rise in the dollar's value against other currencies, especially the Japanese yen.

"All the bits and pieces that were the predecessors of today's NationsBank would not have made this list, " Mr. Berry said. "Putting them all together they do."

Over the last 18 months, the market cap of NationsBank has increased 163%, and First Union's surged 176% Citicorp was up 56%, while Chase Manhattan and BankAmerica each climbed 67%

Stock markets in Europe have also moved higher over the last few years, stoking the market values of Swiss, U.K., and German institutions, but at a pace slower than in the U.S.

Lloyds and Deutsche Bank each posted 93% gains over 18 months, while HSBC Holdings of London climbed 14%, and Credit Suisse was up 45%.

By contrast, Bank of Tokyo-Mitsubishi fell by a third in market capitalization, Sumitomo Bank by 18%, and Dai-Ichi Kangyo Bank by 44%.

No U.S. bank made it into the top 10 for both assets and market value.

UBS, the Swiss banking giant recently created out the merger of Union Bank of Switzerland and Swiss Bank Corp., posted the top market capitalization-$86 billion-and would have led in assets had the deal been completed by yearend.

Union Bank and Swiss Bank reported combined assets of $695 billion at yearend.

Beyond that, there was little correlation between the asset and market capitalization rankings.

The actual leader in assets at yearend was Bank of Tokyo-Mitsubishi, with $692 billion. But at midyear 1998, it was only No. 10 in market capitalization, at $50 billion.

Deutsche Bank AG, which ranked No. 2 in assets, with $580 billion at yearend, ranked 12th in market cap at midyear, at $45 billion.

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