UPDATE 1-Banks may need to raise $140 bln more of capital: CS

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April 11 (Reuters) - Banks may need to raise as much as another $140 billion of capital, said Credit Suisse, which estimated that the U.S. banking crisis could potentially result in $650 billion in total credit-related losses, of which only 40 percent has been revealed so far.

"From an investment perspective, it would be too early to overweight financials given the need for maybe another $140 billion of capital raising as well as a potentially negative feedback loop from the economy," the brokerage wrote in its global equity strategy note.

Credit Suisse said that of the $650 billion loss expected, $390 billion could pertain to lending institutions that may need to raise capital against this. Banks have raised about $160 billion so far, it noted.

With lending conditions set to remain tight for low quality borrowers, the brokerage said it recommended remaining "underweight" on low free-cash-flow yielding companies with sub-investment grade credit ratings.

"Much of the last 30 years has been characterized by declining household spending/real GDP growth volatility as financial innovation and the ability to leverage has helped to smooth out the bumps," the brokerage noted.

"With the economy now de-leveraging and financial innovation stalling, the economy looks more prone to external shocks." (Reporting by Tenzin Pema in Bangalore; Editing by Amitha Rajan)