Citigroup says Barclays may need 9 bln pounds more

(Reuters) - Barclays (BARC.L) may need to raise a further 9 billion pounds in capital, according to analysts at Citigroup, who also said the bank could take further significant write-downs as credit market conditions continue to deteriorate.

Citigroup also said Barclays was more likely to cut its dividend than raise it, despite assurances from the bank that it would keep paying dividends in cash and that its annual payout would be in line with last year's 34 pence per share.

Barclays, the country's third largest bank, said on Wednesday it raised 4.5 billion pounds from investors including Qatar and Japan's Sumitomo Mitsui (8316.T).

"We believe that it still leaves the company short of capital relative to peers," Citigroup said, adding that the bank will remain significantly undercapitalised even before any additional structured credit write-downs that may or may not be required.

Barclays Chief Executive John Varley had said about half the capital will be directed at higher (capital) ratios and about half will be directed at new business opportunities.

"While we think this is a legitimate long-term goal for Barclays, we are sceptical that it will provide meaningful growth opportunities in a group context in the short to medium term," Citigroup said.

It estimated that Barclays would need 6.6 billion pounds of additional equity to reach the same capital position as Royal Bank of Scotland (RBS.L) and 8.6 billion pounds to meet the European banking sector average.

Barclays, which has lost more than $5 billion (2.5 billion pounds) on assets hurt by the U.S. subprime crisis and credit crunch, said last week it planned to raise billions of pounds to rebuild its capital base.

Citigroup kept its "sell" rating on the stock and slashed its price target to 275 pence from 350 pence.