June 20 (Bloomberg) -- Barclays Plc may get 100 billion yen ($927 million) from Japan's Sumitomo Mitsui Financial Group Inc. to restore depleted capital, Nikkei English News reported, without saying where it got the information.

Tokyo-based Sumitomo Mitsui Banking Corp., the banking unit of Sumitomo Mitsui, will buy ``several'' percent of London-based Barclays in a private placement of new shares, Nikkei said. The banks also will increase cooperation in Asia, including the exchange of employees, the news service said.

The global credit market contraction that began almost a year ago has forced banks and securities firms worldwide to raise $302 billion as investment writedowns eroded their capital. Japanese banks have escaped the magnitude of losses that forced U.S. and European rivals to trim costs and fire executives, leaving them better-placed to expand abroad.

``This indicates that Japanese banks are in a safer position than their global peers and have surplus capital to invest,'' said Masafumi Oshiden, a Tokyo-based fund manager at BlackRock Inc., which manages more than $1.1 trillion. ``It's a good move for them and I'd like to see them being even more aggressive.''

Barclays, the U.K.'s fourth-largest bank by market value, would join Edinburgh-based competitors Royal Bank of Scotland Group Plc and HBOS Plc in seeking new funds. Barclays has met with sovereign wealth funds Temasek Holdings Pte of Singapore and China Development Bank to lessen the bank's dependence on a rights offer that would dilute existing shareholders, according to analysts at NCB Stockbrokers in London.

Global Writedowns

Alistair Smith, a spokesman for Barclays, declined to comment when contacted by Bloomberg News. Sumitomo Mitsui Banking Corp. U.S. General Counsel William Haney declined to comment when contacted in New York by Bloomberg News.

Sumitomo Mitsui fell 1 percent to 895,000 yen at 10:35 a.m. in Tokyo. Barclays fell 3.2 percent to 315.75 pence in London trading yesterday. The shares are down 37 percent this year, underperforming the 26 percent drop in the FTSE All-Share Banks Index.

Barclays, which makes a third of its profit from investment banking, has written down 1.7 billion pounds this year. That is less than RBS, the U.K.'s second biggest bank, which wrote down 5.9 billion pounds in 2008. HBOS marked down almost 4 billion pounds.

Financial firms worldwide have posted total losses and writedowns of $397 billion, according to figures compiled by Bloomberg. British banks face slower growth amid higher funding costs and rising defaults as house prices fall at the fastest rate since the recession of the 1990s.

Sovereign Funds

Japanese banks have recorded the equivalent of $13.5 billion of losses tied to the meltdown in credit markets, according to the country's financial regulator. Sumitomo Mitsui has reported 130 billion yen of subprime- and credit-related losses.

The credit contagion has halted sales of mortgage-backed securities, which mortgage lenders use to fund property loans. Barclays could boost its core equity Tier 1 capital, a measure of financial strength, to 6 percent without selling more than 4 billion pounds of new stock, Keefe Bruyette, Deutsche Bank AG and Collins Stewart analysts said this week.

Sovereign wealth funds have invested in Citigroup Inc., Merrill Lynch & Co., Morgan Stanley and UBS AG, which recently raised 16 billion francs ($15.3 billion) in a rights offer after getting 13 billion francs earlier this year from investors in Singapore and the Middle East.

Sovereign wealth fund Qatar Investment Authority, which holds shares in Credit Suisse Group, may back a share issue by Barclays to raise capital, the Financial Times reported June 18, citing an unidentified person close to the fund.

Barclays and Sumitomo Mitsui Financial Group may announce their deal by the end of June, Nikkei said. It would follow Mizuho Financial Group Inc.'s investment of $1.2 billion in Merrill Lynch, the news service said.

To contact the reporters on this story: Poppy Trowbridge in London at ptrowbridge@bloomberg.net; Kari Lundgren in London at klundgren2@bloomberg.net

Last Updated: June 19, 2008 21:56 EDT