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(Sharecast News) - Barclays has agreed to sell around $1.1bn of credit-card receivables in the US to Blackstone as it looks to reduce its risk-weighted assets and create additional lending capacity.
As part of the transaction, Barclays will enter into a long-term strategic forward flow sale and servicing arrangement with Blackstone related to the accounts. Blackstone's investment will be made entirely on behalf of the firm's insurance clients.
Under the terms of the transaction, Barclays will retain legal title in respect of the accounts and will continue to service them for a fee. Barclays Bank will invest into the transaction alongside Blackstone's insurance accounts.
The transaction is expected to release around £1bn of risk-weighted assets on a post internal ratings-based (IRB) approach basis at the Barclays Group consolidated level. Proceeds will be used to fund lending activities.
Anna Cross, group finance director at Barclays, said: "During our Investor Update, we said that we would leverage strategic partnerships to execute risk transfer agreements to reduce capital requirements. I am delighted to announce this first agreement in our US cards book."
Robert Horn, global head of infrastructure & asset based credit at Blackstone, said: "This collaboration demonstrates how we are supporting leading financial institutions with large-scale, long-term, efficient capital solutions in the asset based finance markets. Barclays has a premiere franchise in structured products and consumer banking and we look forward to working with them in the coming years to grow the partnership."
