Barclays, London, is shifting $12.3 billion in problem assets from the recent U.S. mortgage/financial crisis into a new third-party vehicle in a deal it will fund over 10 years through a $12.6 billion loan to the third party involved.
The assets are being sold to Protium Finance, a newly established fund designed to purchase credit market assets from third parties and manage them over time. Protium's partners are providing $450 million of funding for its activities.
The Barclays loan will be used primarily to fund Protium's purchase of the assets from Barclays. Protium is run by C12 Capital Management, an independent asset management firm run by Stephen King, who previously was head of Barclays Capital's principal mortgage trading group, and Michael Keeley, who previously was a member of Barclays Capital's management committee covering European financial institution. Neither will be tied to Barclays.
The assets will stay on Barclays' balance sheet for regulatory purposes and it will continue to hold capital against them. Barclays said the deal is aimed at restructuring exposure to the risk in the assets in such a way that it mitigates the potential impact of short-term movements in market values and monoline downgrades.