NEW YORK (AP) _ Citicorp, in the latest move to strengthen its capital base, said Friday that it plans to issue a special class of preferred stock that would raise about $650 million at current market prices.

Citicorp, the nation's largest banking company, said it planned to offer 32.5 million shares of the stock. No date or price for the stock offering was announced.

Citicorp shares closed Friday at $19.37 1/2 , down 25 cents, on the New York Stock Exchange. The stock offering was announced after trading ended.

A major attraction to investors is that the stock will pay dividends. Last year, Citicorp suspended dividend payments on its common stock, a move that angered shareholders.

The stock issue is part of Citicorp's bid to improve its financial strength under a restructuring announced in December 1990 after the bank recorded enormous losses, largely because of bad loans and operational problems.

Citicorp said it has raised nearly $2 billion through the sale of varied investments, including subsidiaries that offer municipal bond insurance, its Italian retail bank and a share of a stake in the Saudi American Bank.

Citicorp also has conducted three preferred stock offerings in the last two years as part of the capital-raising plan.

The bank is trying to improve its capital-to-assets ratio, which is a key measure of a bank's ability to absorb loan and operating losses.

The minimum level under federal regulations is 4 percent, and Citicorp fell below that last year. The bank's level increased to 4.25 percent at the end of the second quarter. Citicorp said the new preferred stock offering should raise it to about 4.5 percent.

Citicorp Chairman John Reed has said the company has targeted a 5 percent ratio by the end of 1993.

Analysts have estimated that Citicorp needs to raise $5 billion in new capital to raise the ratio to a level that is competitive with other banks.

Shares of the planned preferred stock will be convertible into one share of common stock at a to-be-determined date in three years.

Citicorp will have the right to redeem the shares earlier at set prices. In that case, investors would receive less than one share of Citicorp common stock if the stock price is greater than the specified conversion price.

''We are committed to our program to increase our capital, and we view this as another important step in achieving that objective,'' Nancy S. Newcomb, Citicorp senior officer for funding, said in a statement.

Analysts said issuing 32.5 million new shares of stock would dilute the 360 million shares currently outstanding, as well as the company's earnings, by about 9 percent.

''Raising capital is a necessity for them but it's a burden on the common shareholder,'' said Raphael Soifer, a banking analyst with Brothers, Harriman & Co. ''The holder of this preferred is getting a better deal because he is getting a dividend.''

Soifer said he expected Citicorp to issue more common and preferred stock over time to raise more capital.

After stunning Wall Street with a quarterly loss of $855 million last fall, Citicorp has began turning its performance around thanks to large cuts in expenses and its improving capital base.

In the April-June quarter, Citicorp reported profits of $171 million, up from $11 million a year earlier. Citicorp cut operating expenses 7 percent in the period.