(FORTUNE Magazine) – Powered by steady growth in assets, Japanese banks are increasing their world dominance. Ten of the 11 largest banks outside the U.S. are Japanese, a greater concentration at the top than last year. Of the 35 banks with $100 billion or more in assets, over half are Japanese. Such strength is partly a result of currency translations. The dollar weakened against the yen last year, so asset increases appear greater in dollar terms than in yen. But dollars are what much of the world cares about -- and any way you cut it, the Japanese banks at the top are a virtual dynasty. Dai-Ichi Kangyo, Sumitomo, Fuji, Mitsubishi, and Sanwa have shared the top five rankings since 1984. When FORTUNE published its first banking list 20 years ago, only two of the top ten outside the U.S. were Japanese, and London was still the center of world banking, aside from New York, with Barclays and National Westminster at the top. While the Japanese marched forward, their European counterparts slugged it out in a tumultuous year. Some established heavyweights slipped several notches from last year's rankings. Deutsche Bank fell ten places, to No. 21, and Credit Agricole, the largest non-Japanese bank on this year's list, declined three spots, to tenth. The two banks making their first appearances in the top 100 are European. Banco Bilbao Vizcaya (No. 65) is the product of a merger between two Spanish banks, Banco de Bilbao and Banco de Vizcaya. Sudwestdeutsche Landesbank (No. 90) is a union of two German banks, Landesbank Stuttgart and Badische Kommunale Landesbank. All four banks departing the list are also European: Banco Hispano Americano, Bank fur Gemeinwirtschaft, Banco Central, and the Royal Bank of Scotland. Anticipation of 1992 has caused unprecedented capital movement. European banks are bracing themselves for new challenges from outside their borders. Those who think the future lies along the Pacific Rim will find further support in this year's list. Two banks from the region are back. Helped by appreciation of the local currency against the dollar, assets of the Bank of Seoul and Australia's Commonwealth Bank Group jumped sharply. After a three- year absence, the Bank of Seoul leaped to the 88th position because its assets increased by 50%. Commonwealth Bank rejoins the list at No. 92 after spending a year down under. Third World debt caught up with many Canadian and British banks in 1987. They set aside vast reserves to account for the likelihood that those loans will never be repaid in full. The reserves clobbered 1987 earnings, so profits for 1988 shone by comparison. Toronto-Dominion Bank (No. 77) posted the largest gain, 1,247%. The listed Canadian banks, including the Royal Bank of Canada (No. 42) and the Canadian Imperial Bank of Commerce (No. 51), had combined profits of $2.4 billion, vs. a loss totaling $698 million the year before. In Britain, earnings at Barclays (No. 13) were up 421%, while National Westminster (No. 18) had a 131% increase. British banks also scored well in return on stockholders' equity, a key figure for any business. Britain claims two of the top three: Standard Chartered Bank (No. 85) and Lloyds Bank (No. 36). The leader by this measure was Banco do Brasil (No. 49), but return ratios must be regarded skeptically in a country with triple-digit inflation. The top ten in ROE also included two Swedish banks and two of the ever-present Japanese.

CHART: NOT AVAILABLE CAPTION: THE 100 BIGGEST BANKS OUTSIDE THE U.S.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: RETURN ON STOCKHOLDERS' EQUITY

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: ASSETS PER EMPLOYEE

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: CHANGE IN NET INCOME

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: THE BANKS BY COUNTRY