For the first time a leading analyst has put a "sell" recommendation on major bank stocks because of concerns about year-2000 computing problems.

Citigroup Inc., Chase Manhattan Corp., J.P. Morgan & Co., and Bank One Corp. were all downgraded Monday by Michael L. Mayo of Credit Suisse First Boston Corp. in New York.

"Sell" ratings for any reason have been rare in the upbeat investment climate of recent years. Mr. Mayo, who has turned increasingly bearish over the past year, said the year-2000 issue "creates third-party risk, delays merger savings and productivity projects, possibly reduces market-sensitive revenues around yearend, and creates risks of unknown magnitude."

Amid a falling market, Citigroup's share price fell 3.96%, to $65.125. Chase was off 4.04%, to $75.75, Bank One Corp. 2.19%, to $58.50, and Morgan 1.4%, to $136.75.

Citigroup and Morgan are components of the Dow Jones industrial average, which fell 1.61%, to 10,654.7.

Other analysts, while not dismissing the issue, do not agree that the year-2000 switch amounts to a major threat for bank stock investors.

Aside from the so-called Y2K problem, Mr. Mayo warned that bank asset quality may be weakening faster than can be detected behind a curtain of securitization and special charges, which causes further uncertainty about earnings prospects.

The second quarter may produce "the last, best earnings for some time, given a more difficult external environment and the need for 'earnings cleansing' at some banks," he said, referring to more straightforward reporting.

In an interview Monday, the analyst stressed that banks do not face survivability issues akin to those of a decade ago, but "the risk of owning bank stocks right now does not seem worth the returns."

"Take your money out of bank stocks and put it in the bank," at least for the next nine to 12 months, Mr. Mayo suggested.

Spokesmen at each of the four cited banking companies had no immediate comment. The person representing Bank One said it would be 100% year-2000 compliant.

In Washington, meanwhile, the Clinton administration's top year-2000 expert said Monday that banking is among the best-prepared U.S. industries, because regulators have set strict guidelines and examining financial institutions closely.

"The banking industry is unique," said John A. Koskinen, chairman of the President's Council on Year-2000 Conversion. "It is a testimonial to federal regulation. Across the board, from small to large banks, we have had a very active working partnership over the last couple of years."

But "no one is ever done," he acknowledged. "There is no way anybody is giving guarantees that every system is going to work perfectly no matter how you have tested it."

Mr. Mayo said that "banks benefit from keen regulatory oversight and risk-attuned cultures. Yet third-party risk creates an issue even if banks are totally prepared. A Y2K problem with a bank in an emerging-market country has the potential to cause glitches for banks in the U.S."

"The negative chain reaction from events in late 1998 showed that the global capital markets, especially stocks, do not handle surprises well." Mr. Mayo added. "Banks must earn their stripes while passing the year-2000 test, and the stocks may not perform well in the process."

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