Barclays moves to offload £7bn risky products
Barclays today shifted $12.3 billion (£7.4 billion) of its riskier investments to a new fund set up by two former Barclays Capital executives.
The bank will back the new business, called Protium, with a $12.6 billion loan. The deal does not remove the risk of the investments - which are almost entirely in monoline insurance written against some of the riskier sub-prime assets in the US - from the bank's balance sheet. But it does mean it will not have to adjust their values every six months on the so-called mark-to-market basis which highlights the volatility of such investments.
Barclays finance director Chris Lucas said the move would "secure more stable risk-adjusted returns for shareholders over time".
Protium has been set up by asset manager C12, headed by Stephen King, ex-boss of BarCap's principal mortgage trading group, and Michael Keely, also a former BarCap financier.
The deal came as Barclays dismissed as "opportunistic" a claim by Lehman Brothers that it took $8.2 billion more than it should when it bought key assets of the failed bank a year ago.
