UK banks need to raise £20bn to strengthen balance sheets, says Barclays Capital Similarly, Lloyds's CDS currently trade at 319 basis points, and BarCap reckons it would need to raise €8.1bn - again about a third of its market capitalisation. The analysts calculate that Barclays, BarCap's parent, would need to raise €4.1bn. Across Europe, the institution that needs to raise the most capital is Santander - which has a large operation in the UK - at €14.7bn. Analysts said market conditions would affect how the institutions raised this capital. It's tempting to assume that the funding problems for European banks are cyclical, and that resolving the European sovereign debt crisis is all that is needed to ease banks' access to the bond market. But what if the Spanish and Italian sovereigns neither default nor look particularly safe in the next few years? While the greatest pressure for additional capital is for banks in the periphery, even core banks may need to offer bond holders greater protection from default. With market conditions not conducive to banks executing rights issues at the moment BarCap reckons we could see greater issues of CoCoS - a form of debt that converts into equity at times of stress - by core UK banks. Sir Mervyn King, Governor of the Bank of England, has repeatedly called on banks to increase their capital to protect against future crises.