By Alistair Osborne Last Updated: 9:23PM GMT 10 Mar 2009  Analysts said on Tuesday that, now that Royal Bank of Scotland and Lloyds Banking Group had signed up to the Asset Protection Scheme, the pair would have superior capital ratios to Barclays.  Jonathan Pierce, a Credit Suisse analyst, said Barclay's 6.4pc equity tier 1 ratio at December 2008 "now looks well below the peer group". Lloyds' was 9.3pc and RBS' 9.4pc.  Moreover, while he believed Lloyds and RBS would respectively have tier 1 ratios of at least 6pc and 7pc in 2011, even if the downturn worsens, a similar "stress test" left Barclays' ratio at just 3.1pc.  Although Barclays had a better quality loan portfolio and was trading profitably, "we think there will be growing pressure to improve its equity tier 1 ratio," Mr Pierce said. This would lead to "pressure on Barclays to issue capital".  He still upgraded the shares to 'outperform' arguing that, even if Barclays issued B shares for Government insurance or tapped strategic funds, the stock was too cheap.  Barclays shares rose 6.1 to 67.5p amid a general rally of financial shares. Lloyds jumped 7.1 to 50.8p, HSBC was 50 higher at 399p and RBS up 2 at 21p.  Robert Law, an analyst at Nomura, said: "I think Barclays will want to raise their capital ratios. The APS is one way of doing that."  A Barclays spokesman said the bank unveiled only last month a £6bn pre-tax profit.  "Our capital ratios are well ahead of regulatory requirements," he said, adding that any participation in the APS would be "based on a thorough evaluation of the economic costs and benefits to our shareholders recognising the terms and conditions applied by HM Treasury".  Barclays chief executive John Varley is this week expected to open talks with the Treasury and Financial Services Authority over potential participation in the APS.
Barclays insisted it would only participate in the Government's scheme to    insure toxic assets if it is in shareholders' interests and dismissed City    fears that it needed to raise more capital.