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 NEW YORK, Sept. 24 /PRNewswire/ -- European banks dominate the list of "The World's Safest Banks" by taking 24 of the top 25 places in Global Finance's third semi-annual ranking of the creditworthiness of the world's 250 largest banks, in the mail today.
 The ranking assembles ratings for long-term certificates of deposit from each of the world's three major ratings agencies: IBCA, based in London, and Moody's Investors Service and Standard & Poor's, both headquartered in New York. Global Finance's analysis accompanying the survey noted a sea change in credit quality among geographic areas over time. Specifically, it concluded that the credit quality of some of the biggest Japanese and European banks is eroding and may be permanently downgraded.
 Analysts from these agencies have downgraded ratings of 12 Japanese, 10 Italian and six French banks within the six months ending Aug. 31, the survey found.
 The seven banks which tied for the top ranking in the survey were Deutsche Bank, Union Bank of Switzerland, Rabobank Nederland, Bayerische Landesbank, J.P. Morgan, Landesbank Hessen-Thuringen and Sudwestdeutsche Landesbank. All these banks are triple A rated by all three agencies. Sudwestdeutsche Landesbank is the only newcomer to the list, having received three top ratings after being previously unrated by one of the agencies.
 Overall, U.S. banks' credit rankings are on the rise: 14 U.S. banks received higher ratings during the same six-month period, some of them for the second time in the past 18 months. The survey notes that, like the U.S. banks, United Kingdom banks are also emerging from the soiling influence of bad real estate loans, with five U.K. banks upgraded in the same time period.
 "Banks that lost their double A ratings in the past four or five years won't recover them," declares Virginia Manzer, a director in international finance for Standard & Poor's in San Francisco, in the article accompanying the survey. She added, however, that some banks may get upgraded as they address their problems and as their countries climb out of recession.
 In all, 40 banks were downgraded by at least one credit-rating agency between March 1 and Sept. 1. Meanwhile, only 33 banks were upgraded, many of which come from unrated banks receiving ratings for the first time. These unrated banks were concentrated in Germany and Japan, the survey showed.
 U.S. Banks Improve Rankings
 Although there is only one U.S. bank in the top-ranked list, far more U.S. banks have been upgraded in the past year than in any other country, the survey showed. For the past 18 months, U.S. banks have earned upgrades on the strength of their increased loan loss reserves, higher levels of capital, better underwriting standards and stronger core earnings.
 "We have a substantial number of banks with positive outlooks, and we can see further selected upgrades," comments Michael Destefano, an analyst with Standard & Poor's.
 In its comments about the survey, Global Finance points out that analysts recognize that U.S. banks have benefited from low short-term interest rates and low overhead. Moreover, the article states: "All the U.S. banks had to deal with was a tremendous load of bad loans, primarily from real estate. They have never been coddled and protected by government and regulators to the extent that European and Japanese banks were."
 European and Japanese Banks' Ratings
 Twelve Japanese banks were downgraded in the most recent six-month period, more than from any other country, the survey shows; and some of those banks have been downgraded twice in the last 12 months. Furthermore, whereas most Japanese banks had double A ratings five years ago, now many are trying to cling to a single A rating.
 Although the Japanese banks' ratings predictably have been hurt by the precipitous decline in real estate values in that country, the article points out that the Japanese banking system is not organized to work through asset quality problems quickly.
 Debby Kinzer, a Moody's analyst explains, "The (Japanese) banks weren't prepared for the secular changes in the environment, which meant increased risks. They had inefficient operations and low margins. The added risk came to a head when the real estate market went south."
 Overall, French banks were hurt by a recession, a glut of office space that has caused property values to decline, increased competition, undisciplined lending and the continuation of a privatization effort, the article concludes. Whereas the average French bank was rated double A in 1985, it now rates A minus or triple B plus, with further downgrades expected by analysts. The article points out that French banks, which operate with relatively low levels of capital, were not prepared for a recession.
 Global Finance as Trend Setter
 The "The Global Finance 250 - The World's Safest Banks," published for the first time last September, is just one of Global Finance's many publishing innovations. Another was "The CFO Compensation Survey," published in August.
 Established in 1987, the controlled circulation magazine was the first to view the world financial markets as a single entity. Its readership spans the globe and consists largely of top management of the world's major corporations and financial institutions.
 Global Finance is a joint venture of McGraw-Hill and Global Information, Inc.
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 /CONTACT: Lynthia Romney or Andrew S. Edson of Padilla Speer Beardsley Inc., 212-752-8338; or Joseph Giarraputo or Carl Burgen of Global Finance, 212-337-5900/

CO: Global Finance ST: New York IN: PUB FIN SU:

TW-OS -- NY002 -- 5244 09/24/93 00:02 EDT
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Publication:PR Newswire
Date:Sep 24, 1993

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