June 6 (Bloomberg) -- Royal Bank of Scotland Group Plc may have less capital than its largest peers and go back for more after raising 12 billion pounds ($23.5 billion) in Europe's biggest rights offering, according to Deutsche Bank AG.

Edinburgh-based RBS, the U.K.'s second-biggest bank, plans to use the money from selling shares and assets to boost core equity Tier 1 capital to more than 6 percent by year end from 4.5 percent now. It may not be enough to match capital ratios at HSBC Holdings Plc, UBS AG, HBOS Plc and Lloyds TSB Group Plc, according to estimates from Deutsche Bank and Credit Suisse Group.

``I'm not convinced that is a high enough level going into a post-credit crunch world,'' said Robert Talbut, chief investment officer at Royal London Asset Management, which owns RBS shares. ``I still think there is a risk they will need to raise capital.''

RBS stopped taking orders today from existing investors for shares at 200 pence apiece. That was a discount of 23 percent to the bank's closing share price on April 22, when the rights offering was announced to shore up reserves after last year's purchase of ABN Amro Holding NV assets and this year's writedowns of 5.9 billion pounds.

RBS fell 5.2 percent today to 245.5 pence in London, valuing the bank at 39.6 billion pounds. About 1.35 billion RBS shares traded this week, more than four times average weekly volume in the past six months.

U.K. banks stocks fell 4 percent after the U.S. Labor Department said the American economy lost jobs for a fifth month and the unemployment rate rose by the most in two decades.

Poor Data

``The U.S. jobs data was poor,'' said Sandy Chen, a London- based analyst at Panmure Gordon & Co. RBS may be 5 billion pounds short of capital even after selling shares and assets, said Chen, who predicts the shares may fall as low at 175 pence.

RBS offered 11 new shares at 200 pence apiece for every 18 existing shares. RBS rose 7.4 percent in this week's trading, buoyed by speculation that its rights offer was successful. Spokesman Carolyn McAdam declined to comment before RBS discloses how many shares were sold on June 9.

``The vast majority of our clients are taking them up,'' said Richard Hunter, head of U.K. equities at Hargreaves Lansdown Stockbrokers in London.

The bank paid fees of 180 million pounds to underwriters Goldman Sachs Group Inc., Merrill Lynch & Co. and UBS AG and may pay an additional 0.25 percent after the offering.

RBS also is trying to sell its insurance division and other assets including its Angel Trains Ltd. railway leasing company.

`Weak Start'

Deutsche Bank, Standard & Poor's Equity Research Ltd. and Morgan Stanley estimate RBS's core equity capital, which excludes bonds, will miss its 6 percent target.

``Given the weak starting position of the group from a capital perspective, the group remains relatively dependent'' on asset sales, Jason Napier, a London-based analyst for Deutsche Bank, said in a note to clients. ``If deals are not struck and capital market conditions remain difficult, RBS could conceivably undershoot its own capital targets for some time.''

Not all U.K. analysts agree. Citigroup Inc. estimates the bank can reach its 6 percent core equity target without selling the insurance arm and said the rights offering put it ``in a stronger position than most of its peers.'' Morgan Stanley also says the rights offer helps resolve ``many'' concerns.

RBS paid 14.3 billion euros ($22.4 billion) for part of Amsterdam-based ABN Amro in the world's biggest banking takeover. A third of this year's writedowns stem from that acquisition.

`Too Long at the Party'

Investors such Royal London and Rathbone Brothers Plc. have criticized Chief Executive Officer Fred Goodwin for doing too many acquisitions and paying too much for ABN Amro.

``They stayed too long at the party,'' said Julian Chillingworth, chief investment officer at London-based Rathbone Brothers, which holds RBS shares. ``Sir Fred should have left at midnight and not stayed until 3 a.m.''

Zurich-based UBS is trying to raise 16 billion Swiss francs ($15.3 billion) to replenish capital. Merrill estimates its core equity Tier 1 capital is now 9 percent. Its stock fell 6.4 percent to 24.62 euros in Zurich.

Barclays, the U.K.'s fourth-biggest bank, could lift its core equity Tier 1 capital to 6.2 percent from 5.1 percent by raising 5 billion pounds in new money, Merrill Lynch said. Barclays is weighing ``options'' for strengthening reserves, it said May 15. Its shares fell 7 percent to 337.75 pence in London.

HBOS, which aims to raise 4 billion pounds in a rights offering, fell 7.6 percent to 330.75 pence in London.

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

Last Updated: June 6, 2008 13:37 EDT