July 3 (Bloomberg) -- UBS AG may post $6.9 billion of additional writedowns and seek to raise more capital, Citigroup Inc. said, a day after Chairman Peter Kurer told a newspaper the largest Swiss bank won't need more funds.

The Zurich-based company, which wrote down $38 billion over the past three quarters, still carries $83 billion of ``risk exposures that are likely to require further markdowns,'' London- based Citigroup analyst Jeremy Sigee said in a note today.

Sigee, who rates UBS a ``hold'' with a ``high risk'' caveat, estimates the company may post a loss of 4.5 billion Swiss francs ($4.4 billion), and announce writedowns of as much as 7 billion francs when it reports second-quarter earnings Aug. 12. JPMorgan Chase & Co. analysts yesterday said UBS may need to mark down its assets by a further 5.1 billion francs.

Sigee blamed a slump in financial markets for asset price declines, and said UBS may need to raise more capital, either from asset sales or from shareholders. Kurer, in remarks published by Swiss newspaper Finanz & Wirtschaft yesterday, said the bank won't need more funds.

UBS rose 40 centimes, or 1.9 percent, to 21.02 francs in Swiss trading, paring declines this year to 55 percent.

Writedowns

Banks and securities firms have turned to investors for $322 billion to replenish reserves after $403 billion of writedowns and credit losses tied to the collapse of the U.S. subprime mortgage market. UBS trails only Citigroup in credit losses and capital raising after turning to investors for $29.5 billion since the credit crisis started a year ago.

Speculation financial firms would need more funds helped drive an index of European banking shares down 8.3 percent in the previous five days.

Kurer, who replaced Marcel Ospel as chairman in April, is leading a strategic review of all of the bank's businesses to make them better complement the wealth management unit, which he has called the ``core franchise.''

The bank plans to provide results of the review at an extraordinary shareholders meeting on Oct. 2. The meeting was called to elect four new board members, as Kurer seeks to increase the level of financial expertise on the board after criticism from shareholders including former UBS President Luqman Arnold.

Wealth Management Woes

UBS is also facing a U.S. probe into whether the Swiss bank helped affluent customers evade American taxes. A federal judge this week granted a request from prosecutors to let the Internal Revenue Service issue a summons to UBS for information about clients with secret accounts at the bank.

``We see further pressure on the private bank franchise from the group's weak capital position and ongoing high-profile tax probes,'' Sigee said. He estimates that clients probably withdrew a net 11.3 billion francs from UBS's wealth management unit in the second quarter.

Clients at the wealth management international and Switzerland unit added 2.5 billion francs in the first quarter, down from the quarterly average of 31.3 billion francs in 2007.

Kurer, in remarks made to Finanz & Wirtschaft that were confirmed by spokeswoman Sabine Woessner, said the bank takes the situation at its U.S. business ``most seriously.''

To contact the reporter for this story: Stuart Kelly in Sydney skelly22@bloomberg.netElena Logutenkova in Zurich at elogutenkova@bloomberg.net

Last Updated: July 3, 2008 11:50 EDT