Barclays Bank plc is planning to issue £4.5 billion (US$8.86 billion) in new equity, which Fitch Ratings says is reassuring because it provides a greater capital cushion.

The rating agency points out that the UK bank’s capital ratios are likely to decline over time as around half the new capital may be deployed to grow the business, largely through an organic strategy. However, management intends to maintain capital ratios above long-term target levels while current market turbulence persists, it adds. On a pro-forma basis, the new equity would have increased the group’s capital ratios measured at the end of 2007 by around 120 basis points.

Fitch believes Barclays is at the forefront of the banking industry in the sophistication of the models it employs to determine the level of capital it believes is needed to support the risks in its business. However, even after the share issue, Barclays’ intends to run with capital ratios weaker than many of its peers’, it notes.

Additionally, Fitch says that while Barclays has publicly provided a reasonable amount of disclosure around its U.S. sub-prime structured credit, leveraged finance, and similar risks, it has been less transparent around levels of write-downs per asset class than some others.

“Because accounting rules prevent the booking of impairment charges until an impairment event has occurred, Fitch believes certain of Barclays Capital’s exposures that are in banking books (and are thus not being marked-to-market), including high-grade super senior ABS CDO and leveraged finance exposures, may be taking longer to suffer write-downs than had similar effective risks been in marked-to-market portfolios,” it says. Along with other global banks, Barclays Capital could also be exposed to additional write-downs on its exposure to monoline insurers, in the light of recent rating downgrades, it adds.