Barclays Sells $12.3 Billion Credit Assets To Former Execs' Fund
September 16 2009 - 10:05AM
Dow Jones News
Barclays PLC (BCS) Wednesday sought to reduce the effects of
volatile credit markets by selling $12.3 billion in risky credit
assets to a new fund called Protium Finance LP that will manage
them and return their income to the bank in the form of interest on
a $12.6 billion loan.
The loan to Protium - a new fund being managed by former
Barclays executives - will be used to buy the assets and give the
manager, C12 Capital Management, money to set up its
operations.
Barclays will keep the assets on its balance sheet for
regulatory purposes and therefore won't be able to reduce the
capital it needs to hold against them, but it will no longer have
to record market moves in the value of the assets.
"We are not seeking through the transaction to effect a change
to our underlying credit-risk profile. But we are restructuring a
significant tranche of credit market exposures in a way that we
expect will secure more stable risk-adjusted returns for
shareholders over time," Barclays Group Finance Director Chris
Lucas said.
Protium's manager, C12 Capital Management, is being set up by
Stephen King, the former head of Barclays Capital's principal
mortgage trading group; and Michael Keeley, a member of the
investment banking unit's management committee covering European
financial institutions.
Barclays isn't investing in the Protium fund.
The $12.6 billion loan to Protium matures in 10 years and is
secured on the credit assets. Interest payments will be drawn from
income generated by the fund's assets after the managers collect
fees and expenses.
Company Web site: http://www.barclays.com
-By Margot Patrick, Dow Jones Newswires; +44 (0)20 7842 9451;
margot.patrick@dowjones.com