Barclays Selling Assets To Blackstone: Too Small To Impact Credit

Barclays (BARC LN) is selling USD1.1bn of card receivables to Blackstone's (BX US) managed accounts. For Barclays, this has two effects but the transaction is immaterially small in its current form.

• Firstly, it reduces Barclays’ capital consumption in its US cards business. However, this is just 3.2% of Barclays’ US cards balances (of GBP27.3bn, just 0.2% of Barclays’ total loan book), so very small.
• Secondly there’s a new flow business: Barclays’ is establishing a flow agreement with the Blackstone entities whereby Barclays continues to service these balances and future incremental business, whilst retaining legal title without requiring capital recourse to group.
• We wrote recently that Capital One’s acquisition of Discover has reduced potential buyers for Barclays’ US assets, so it’s interesting to see relatively innovative structures being put in place to achieve similar ends.