Barclaycard on Tuesday became the latest credit card lender to benefit from Bank of America Corp.'s crash diet, by scooping up a $1.3 billion SLM Corp. or Sallie Mae card portfolio.

The deal announced Tuesday mostly includes assets owned by BofA, with a smaller portfolio that Barclaycard bought directly from student loan giant SLM Corp. None of the parties would disclose the terms or specifics of the deals.

The acquisitions mark a renewed effort for Barclays' U.S. credit card unit to expand its operations, after it spent much of the past decade signing deals to issue cards on behalf of merchants, sports teams, and other third parties.

Barclaycard faces some stiff competition in this specialized credit card market, as better-known U.S. megabanks including Citigroup and Capital One Financial Corp. recommit to or expand similar operations. Now Barclays has gained 300,000 active cardholders — and a valuable way to market itself to a diverse group of students and their families.

"It was a strategic opportunity for us to connect to a mature brand that has broad recognition and a good marketing platform," Surinder Singh, general manager of U.S. cards for Barclaycard, told ASR sister publication American Banker in an interview.

Megan Bramlette, a director with Auriemma Consulting Group, said, "It's smart for Barclaycard to pick up portfolios that already have strong marketing connections to cardholders, because they have no U.S. branch network and [the Sallie Mae Upromise rewards program] gives them yet another diverse channel to reach consumers on a broad level."

The sale also relieves B of A of one of its larger cobranded card portfolios. The second-largest bank by assets once specialized in issuing cards on behalf of third parties, but now it is dumping those portfolios in its effort to slim down and focus on core operations. In December, it sold $1 billion of credit card portfolios to U.S. Bancorp and First National Bank of Omaha.

Barclaycard in 2009 began a string of new cobranded card launches and acquisitions that included taking over the U.S. Airways card. The following year, it also took over the National Football League card that BofA had let expire and launched cobranded hotel cards with Best Western, Choice Hotels and Wyndham Hotels. In September 2011, Barclays launched a co-branded card with Williams Sonoma.

The core product in the portfolio Barclays acquired from BofA is the Upromise cobranded MasterCard, which enables cardholders to earn rewards that can be applied towards college savings plans. Cardholders may accelerate rewards by making purchases through thousands of brick-and-mortar merchants and 900 online merchants, according to Tim Hanrahan, SLM's senior vice president of credit card and banking products.

He adds that the student lender is also happy that the deal will unify the Sallie Mae and Upromise cards under a single issuer, after a somewhat tumultuous ownership path.

Citigroup launched the Upromise cobranded MasterCard in 2001 and ran it until B of A bought that card in 2009. In March 2011, SLM separately launched the Sallie Mae Visa card.

Barclays plans to relaunch both cards during the second quarter and will also "review" its card network relationships, Singh said. He joined Barclays in late 2010 after three decades with Citigroup.

As part of the deal, BofA will continue to service the cards through September 2012, a BofA spokeswoman says.

SLM will continue to do "much of the marketing" for the Upromise and Sallie Mae cards, Hanrahan says, noting that the student lender has no plans to launch another credit card program on its own.

Analysts say the deal is likely a coup for Barclaycard.

The complexity of the deal Barclaycard, with two brands, two issuers and an attached merchant coalition, "probably means there weren't a lot of competitors vying for it," Brian Riley, senior research director at TowerGroup, suggested.

"The whole Upromise concept is a good one, but it's not a real easy thing to work with," Riley said. "You've got a lot of moving parts."

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