June 27 (Bloomberg) -- Barclays Plc, Britain's fourth- biggest bank, may need an additional 9 billion pounds ($17.9 billion) to absorb credit-related writedowns and bring its capital in line with European peers, Citigroup Inc. said.

The London-based bank will raise 4.5 billion pounds in a share sale announced earlier this week, lifting its core-equity Tier 1 capital ratio to 5.8 percent from below 5 percent, analysts led by London-based Tom Rayner said today in a research note. That will lag behind Royal Bank of Scotland Group Plc and make Barclays Europe's ninth-weakest bank in terms of capital, he said.

``With credit market conditions continuing to deteriorate globally, we believe it's simply a matter of time before further significant writedowns are taken,'' said Rayner, who has a ``sell'' rating on the stock.

Barclays, which will sell shares to Japan's Sumitomo Mitsui Finance Group Inc. and sovereign wealth funds in Qatar, Singapore and China, said it will use half the funds to fuel growth and half to boost capital. It raised less capital this year than RBS and Fortis, the banks that outbid Barclays and bought Amsterdam- based ABN Amro Holding NV for 72 billion euros ($113 billion.)

Barclays fell 1.9 percent to 298 pence in London, trailing the FTSE 350 Banks Index, which fell 0.5 percent. The shares have dropped 39 percent this year, valuing the bank at 19.5 billion pounds.

Fortis, based in Amsterdam and Brussels, dropped as much as 19 percent yesterday, the most since the company was formed in a merger 18 years ago, after it announced plans to raise an additional 8.3 billion euros to shore up capital. The shares rose 3.5 percent today to 10.62 euros in Brussels.

Writedowns

Edinburgh-based RBS, which led the purchase of ABN Amro last year, has written down 5.9 billion pounds of credit assets and raised 12.3 billion pounds in a rights offer this month. Its shares fell 0.1 percent to 217.75 pence in London.

RBS and Fortis had their credit rating lowered by Moody's Investors Service today because of writedowns and integration costs following the ABN Amro deal.

Banks and securities firms have raised $322 billion in the past year after record writedowns and credit losses of almost $400 billion from the collapse of the subprime mortgage market.

Barclays has written down 1.7 billion pounds on credit assets this year. It may need to raise an additional 6.6 billion pounds to absorb more credit losses and bring its capital ratios in line with RBS's 6.4 percent, Rayner said. Barclays would need to raise an additional 2 billion pounds to match the European average of 6.9 percent, he said.

Barclays's stock may trade at a ``discount'' because of its weak capital ratios relative to European rivals and questions will persist as to whether it needs to raise more capital, said Alex Potter, a London-based analyst at Collins Stewart. Potter has a ``sell'' rating on the stock.

Barclays spokesman Alistair Smith declined to comment on the Citigroup report.

To contact the reporters on this story: Ben Livesey in London blivesey@bloomberg.net

Last Updated: June 27, 2008 12:45 EDT