Most major banks across the world still don't have adequate capital to comfortably maintain their credit ratings despite recent improvements, ratings agency Standard & Poor's said in a report Monday, as it launched a new framework to track banks' capital adequacy and called into question the usefulness of standard market and regulatory measures.

S&P said the average, risk-adjusted capital ratio for large, international banks it looks at is just 6.7% as of June 30, 2009,  more than three percentage points below their average tier one ratios, and illustrating the agency's "opinion that capital remains a neutral to negative rating factor for the majority of banks in our sample."

The most-vulnerable bank under its criteria is Japan's Mizuho Financial Group Inc., with just a 2% estimated ratio, while the strongest is HSBC Holdings PLC, with a 9.2% estimated ratio. To handle the full stress embedded in S&P's measure, banks must have a risk-adjusted capital ratio of at least 8%, S&P said.

S&P provide the first global comparison of banks' risk-adjusted capital adequacy as measured by their risk-adjusted capital (RAC) ratios compared with regulatory Tier 1 ratios and leverage ratios, using a global sample of 45 large banks.

The ratings agency said it expects this more than 300-basis-point (3%) average gap between ratios to narrow in the future as a result of expected changes in the calculation of regulatory capital ratios, including a more stringent definition of Tier 1 capital and increased capital charges for trading risk.

Bank of Ireland had an RAC of 5.7% and AIB's RAC was 5%.

UBS had an RAC of 2.2% and Citigroup's was 2.1%.

S&P said capital is just one element in our analysis alongside many other factors, including government support. Our sample includes several banks with ratings factoring in explicit government support. In addition, this sample is not representative of the overall banking universe average. As already highlighted in the global case study we performed in 2008, the average RAC ratio for large banks was less than the overall banking industry average both before and after diversification/concentration adjustments.