Even after posting $28 billion in losses last year, writing off more than $108 billion in toxic assets since the beginning of 2007 and taking $50 billion in aid from the U.S. government, Citigroup (C) is still the second-strongest bank in the world, according to The Banker, a British financial magazine.

Say what? Citi trails only JPMorgan Chase (JPM), widely regarded as the healthiest of the big financial institutions, on the publication's list of the thousand sturdiest banks, and is immediately followed by Bank of America (BAC), which has seen its fair share of losses and write-downs over the past couple of years. What exactly do The Banker's rankings measure?

They're based on the size of a bank's buffer against future losses. And at Citi, that buffer is huge.

The relevant nugget of financial metrics is Tier 1 capital, "the most relevant measurement of bank strength," according to The Banker's web site. Drawn from a group of balance sheet entries such as shareholder equity, deferred tax assets (i.e., unused deduction for past losses), and goodwill -- the stuff a bank burns through as its financial health deteriorates.

At the end of March, Citigroup boasted Tier 1 capital of some $121 billion, according to its regulatory filings.

That may sound impressive, but keep in mind that this is a company with $1.8 trillion in assets. And a lot of people who follow Citi closely fear it may have to take billions of dollars in additional write-downs to account for losses on mortgage-related investments, credit cards and business loans.

And it's also worth noting that the Federal Reserve used a different measure of financial strength in its stress tests, one that many analysts thought was much too lenient. Even then, Citi had to swap $58 billion of preferred stock for common equity, diluting shareholders by 80 percent, to meet it.

If The Banker's rankings prove anything, it might be this: Citi is, as CEO Vikram Pandit has said, one of the best-capitalized banks in the world. But in times like these, there's more to financial strength than that.

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