LISTING OF THE WORLD’S LARGEST BANKS  and TABLE OF COUNTRY RANKINGS at the end of the article.

After four years as the largest bank in the world, Sumitomo Bank of Japanhas finally been knocked off the top spot in this year’s survey. Since itis the first major Japanese bank so far to announce provisions for bad debt,this is hardly surprising – it announced losses of $3.2 billion in 1995,the first Japanese bank ever to record a deficit. The slight fall in capital(0.42%) drops Sumitomo to sixth place in the rankings.

With the merger of Mitsubishi and Bank of Tokyo not taking effect untilApril 1 1996 (and thus too late for inclusion in our rankings), HSBC’s $26,665million equity figures put it in first place. The UK-based bank also madethe most profits last year with $3.8 billion, nearly a billion dollars morethan its nearest rival, Chase – newly formed from the merger of ChemicalBank and Chase Manhattan and now America’s largest bank.

A glance over the rest of the top 200 shows that the banking industry iscontinuing along a healthy path. All the top 10 have recorded market capitalof $20 billion or more, 21 banks made a profit of over $1 billion, and onlytwo banks reported a loss in 1995.

Another characteristic of the last 12 months has been mergers among severalof the top banks. In addition to the Chase-Chemical marriage, First Chicagoand NBD Corporation joined forces in the US and now stand at 42 in the worldrankings, five places behind the newly merged Lloyds and TSB bank groupin the UK. The equity of Halifax Building Society, also from the UK, soaredto $10.1 billion after its merger with Leeds Permanent Building Society.In Switzerland the rumours of a merger between UBS and CS Holding came tonothing, although a merger between two of the big three Swiss banks – SwissBank Corporation being the third – still cannot be ruled out. Undoubtedlymergers will continue to affect the rankings over the course of the next12 months.

This year, in conjunction with Eurastar (see methodology box), we have managedto expand our rankings to include a total of 1,249 banks from 134 countries- 23 more than last year. Countries being listed for the first time comefrom all continents. They including El Salvador, Macau, Mozambique and Angola,as well as former eastern bloc states such as Albania, Estonia, Armeniaand Belarus.

One country worthy of note is Portugal, whose banking industry has consolidatedinto several groupings. The main one is the Champalimaud group which comprisesBanco Totta & Acores, Banco Pinto & Sotto Mayor and Credito PredialPortugues. Also, Banco Comercial Portugues has grouped with Banco Portuguesdo Atlantico, Banco Fomento & Exterior with Banco Borges & Irmao,and Banco Portugues do Investimento has teamed up with Banco Fonsecas &Burnay. Because most have yet to report their 1995 results, and becausenot all the groupings are mergers or takeovers, we have printed the banksaccording to last year’s tables.

The banking sector in Lebanon – one of the strongest before the civil warsand invasions of the last 20 years – is growing rapidly. The figures for1994 (the latest available) show the top four banks recording equity growthof over 100%, with that of Crédit Libanais at 366%. Assets have alsogrown significantly, although the gains have not been as dramatic as withequity.

In Mexico, by contrast, the 1995 figures indicate a general drop in equity,assets and profits as a result of the debt crisis that hit the country atthe beginning of last year. We rank our analysis by shareholder’s equity- measured in accordance with the tier one requirements laid down by theBank for International Settlements in Switzerland – because it is generallyregarded as a more reliable means of gauging a bank’s inherent strengththan assets.

But, as was mentioned in last year’s analysis, banks can be overcapitalized,and the growing trend to rectify this with share buy-backs might prove difficultto measure by our ranking method.

Five major banks have announced buy-back plans in the last year – BankAmerica,Citicorp, Wells Fargo and First Bank System in the US, and Barclays in theUK – yet all have seen a rise in market capitalization because stock marketstend to look favourably on those businesses which have learnt from the excessesof the 1980s and treat their capital with more caution.

Definitions Shareholders’ equity is the sum of the following, as applied by theregulatory authorities of each country: common stock, preferred stock, surplus/premium,statutory reserve, legal reserve, revaluation reserve, retained earnings,profit not distributed and minority interest. Treasury stock and dividendspayable are subtracted from the total. Subordinated debt and non-capitalreserves, such as untaxed reserves, are excluded.

Total assets are as reported in financial statements, net of contraaccounts.

Net income is as reported in financial statements, after taxes, whenpossible, and includes extraordinary items. In addition, net income is beforeuntaxed allocation to reserves, in line with the regulations in each country.

Return on equity is calculated using total capital funds, which inaddition to shareholders’ equity include for example qualified subordinateddebentures and reserve for loan loss.

Methodology

The rankings in the Euromoney Bank Atlas were compiled from the Eurabankdatabase, as supplied by the Eurastar division of Sleigh Corporation, FranklinLakes, New Jersey, USA. For further information regarding the Eurabankdatabase, please call +1 201 405 1800.

All institutions whose primary business is taking deposits are eligiblefor inclusion. Figures are presented, where possible, in consolidated form,including data from non-banking activities. Banks which are owned by otherfinancial institutions are not listed separately, but are consolidated inthe parent’s figures. Banking groups are limited, however, to those organizationswhere the parent holds management control over the subsidiaries.

The information in the survey comes from either banks’ consolidated annualreports or a detailed questionnaire sent out by Euromoney in early April.

The world’s top 200 banks

TABLE OF COUNTRY RANKINGS: THE EUROMONEY BANK ATLAS Euromoney world bank ranking 1996

(alphabetical listing)

 Biggest banks by country (A to G)  

 Biggest banks by country (H to L) 

 Biggest banks by country (M to S)  

 Biggest banks by country (T to Z)