Magazine article American Banker

Top 100's Market Cap Zoomed 12.1% in Quarter

Magazine article American Banker

Top 100's Market Cap Zoomed 12.1% in Quarter

Article excerpt

A sizzling summer stock rally pushed the market value of the nation's 100 largest bank holding companies past three quarters of a trillion dollars.

Despite periodic rate scares, investors are still drawn to banks because of the strong economy and bank consolidation and steady earnings growth.

"This trend suggests that the top U.S. banks will eventually possess among the largest market caps in the world" among financial services companies, said James J. McDermott Jr., president of Keefe, Bruyette & Woods Inc.

Citicorp again placed first, with $61.3 billion of market capitalization on Sept. 30. BankAmerica Corp. was second, with $51.4 billion, closely followed by Chase Manhattan Corp. at $49.9 billion and NationsBank Corp. at $48.1 billion.

Market capitalization of the largest 100 banks was $769.6 billion, a gain of 12.1% during the third quarter. (The banks and their market values are listed on page 26.)

That is a long way from the paltry $101.4 billion to which the top 100 had plunged at the end of 1990, amid the industry's worst credit crisis since the Great Depression.

Indeed, the third quarter was the 11th straight period in which these banking industry leaders added capitalization. The last time the value of the top 100 fell was in late 1994, when the Federal Reserve raised rates.

Shifts in the industry's market capitalization are influenced by overall stock market trends, but they also indicate how investors feel about banks' business strategy and management, and the economic conditions under which they operate.

"As long as rates, particularly long-term rates, do not rise and the prices of the largest acquiring banks don't fall out of bed, I think you will see the trend continue," said industry analyst John J. Mason of Interstate/Johnson Lane.

No bank illustrates the huge market advance of the industry during this decade more than New York's Citicorp. …

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