SALOMON INC <SB> SAID TO CUT U.S. BANKS RATINGS
Salomon Inc has lowered its investment
ratings on all U.S. money center banks, institutional sources
said.
    The sources said Salomon believes that other money center
banks may feel compelled to follow Citicorp's <CCI> lead
in its filing with the Securities and Exchange Commission
relating to its loan exposure to Brazil.
    They also said Salomon believes that other banks may
strongly consider the possibility of placing Brazilian loans on
a non-accruing status with the consequent negative impact on
earnings.
    The sources said the ratings were lowered to M from O-plus.
The stock are now expected to match the Standard and Poor's 500
Index, rather than outperform the index as previously expected.
    The sources said it is also understood that the change in
the coding of these stocks should definitely not be taken as a
sell-recommendation because Salomon is said to believe that its
downgrading will only prove temporary.
    The banks affected by the change in investment coding are
Bank of New York Co Inc <BK>, Bankers Trust Co <BT>, Chase
Manhattan Corp <CMB>, Chemical New York Corp <CHL>, Citicorp
<CCI>, Irving Bank Corp <V>, Manufacturers Hanover Corp <MHC>,
J.P. Morgan and Co Inc <JPM>, Marine Midland Banks Inc <MM>,
Republic New York Corp <RNB>, Bank of Boston Corp <BKB> and
First Chicago Corp <FNB>.
    The institutional sources said that Thomas Hanley, a
director of Salomon Inc subsidiary Salomon Brothers who is in
charge of bank stock research, believes Citicorp's move is
well-timed.
    Should Citicorp actually place the Brazilian loans in a
non-performing category at the end of this quarter this action
would serve to alleviate the urgency associated with the debt
negotiations, he argues.
    Thus Citicorp's bargaining position would appear to have
been much enhanced.
 Reuter
