Barclays has unveiled the sale of $12.3bn (£7.5bn) of toxic credit assets to a new company in a move to reduce its balance sheet volatility and could see it emerge as a model for financial institutions hit by the credit crisis.
The deal may signal revived interest in markets for complex structured credit products of the kind that poisoned the financial system.
Barclays is lending the new company, Protium, the value of the purchase, in effect insulating its balance sheet from the risk of further market falls in the value of the assets. Barclays will instead look to book income from the loan as it is repaid.
The sale comprises complex assets including mortgage loans and structured credit assets insured by monoline insurers.