June 20 (Bloomberg) -- Barclays Plc, the fourth-biggest U.K. bank, may get about 100 billion yen ($927 million) from Japan's Sumitomo Mitsui Financial Group Inc. as part of a plan to restore depleted capital, a person with knowledge of the plan said.

Sumitomo Mitsui, Japan's second-largest bank by market value, will make the investment through its Sumitomo Mitsui Banking Corp. unit, the person said, declining to be identified because the deal hasn't been completed. Chika Togawa, a spokeswoman for Sumitomo Mitsui in Tokyo, declined to comment, as did Alistair Smith, a spokesman for London-based Barclays.

``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 oversees more than $1.1 trillion. ``It's a good move for them and I'd like to see them being even more aggressive.''

Barclays, hurt by 1.7 billion pounds ($3.35 billion) of writedowns, said earlier this week it may sell stock to overseas and existing shareholders. Banks and securities firms have raised about $303 billion in the past year after almost $400 billion of writedowns and credit losses caused by the collapse of the U.S. subprime mortgage market, data compiled by Bloomberg show.

Barclays fell 2.4 percent to 308.25 pence in London trading, valuing the bank at 20.2 billion pounds. The shares have declined 39 percent this year, more than the eight-member FTSE All-Share Bank Index, which lost 26 percent.

Building Relationships

Sumitomo Mitsui's stake would amount to about 2.3 percent of the bank's share capital, based on Barclays's closing price yesterday. Barclays also may get investments from current shareholders Temasek Holdings Pte of Singapore and China Development Bank, according to analysts at NCB Stockbrokers in London.

``It makes sense for Barclays to build relationships in the region,'' said Leigh Goodwin, a London-based analyst at Fox-Pitt Kelton Ltd. who has an ``in line'' rating on the stock. ``But what's really important is the total Barclays can raise and whether they're going to have further writedowns to match.''

British banks, facing slower growth amid higher funding costs and rising defaults, have asked investors for a total of 16 billion pounds to shore up their balance sheets.

HBOS Plc, the U.K.'s biggest mortgage lender, plans to raise money after Chief Executive Officer Andy Hornby announced asset writedowns of almost 4 billion pounds since the credit crunch began a year ago. The bank's rights offer follows a 12.3 billion- pound share sale by Royal Bank of Scotland Group Plc and an increase in missed mortgage payments that forced Bradford & Bingley Plc to cut the price of its rights offer by 33 percent.

`Understandable'

``Given what's happened with recent rights issues, it's understandable that Barclays would want to avoid a full rights offer, while at the same time preserving pre-emptive rights for their existing investors.'' said Derek Chambers, an analyst at Standard & Poor's Equity Research Ltd. in London, who has a ``hold'' rating on the stock.

Barclays said this week that it was considering selling new shares and that profit in May was well ahead of last year's figure. The bank could raise at least 4 billion pounds from a number of investors, said Goodwin.

``If they raise that amount, and investors are comfortable with the level of writedowns they've disclosed, then this would give them some credibility,'' he said. ``However, trying to get multiple investors all together at the pricing level will take a lot of coordination.''

Japan's Credit Losses

Sumitomo Mitsui's plan to invest in Barclays was earlier reported by Nikkei English News. Sumitomo Mitsui fell almost 1.5 percent to 883,000 yen in Tokyo trading.

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.

As part of any agreement, Barclays and Tokyo-based Sumitomo Mitsui will work together on projects in Asia, said the person who declined to be identified. The companies may announce their deal by the end of June, the person said.

Goldman Sachs Group Inc, the world's biggest securities firm, holds $1.4 billion in Sumitomo Mitsui stock that it acquired in May. The New York-based firm bought 150.3 billion yen of preferred shares in Sumitomo Mitsui in 2003 to bolster the bank's capital, eroded by losses on stockholdings and bad-loan disposals.

Sovereign wealth funds have invested in New York-based Citigroup Inc., Merrill Lynch & Co. and Morgan Stanley, as well as UBS AG in Zurich. UBS raised 16 billion Swiss francs ($15.3 billion) in a rights offering after getting 13 billion francs earlier this year from investors in Singapore and the Middle East.

Qatar Investment Authority, which has a stake in Zurich-based 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.

To contact the reporters on this story: Poppy Trowbridge in London at ptrowbridge@bloomberg.net; Ichiro Suzuki in Tokyo at isuzuki@bloomberg.net

Last Updated: June 20, 2008 12:25 EDT