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Barclays Sets Up Protium Siv To 'offload' Debt - Kind Of

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http://www.bloomberg.com/apps/news?pid=206...id=as5f4rMU.gbE

Sept. 16 (Bloomberg) -- Barclays Plc, the U.K.’s second- largest lender, agreed to sell $12.3 billion of debt to a fund run by two former executives as it seeks to reduce losses linked to credit-market volatility.

Barclays will sell the assets, including bonds backed by U.S. subprime mortgages, to Protium Finance LP, set up by Stephen King, former head of the bank’s principal mortgage trading group, and Michael Keeley, who was a member of Barclays Capital’s management committee, the London-based bank said in a statement today. Protium will fund the purchase with a $12.6 billion loan from Barclays and $450 million from investors.

Barclays said it won’t record a gain or loss from the sale, and the assets will remain on its balance sheet for regulatory purposes. By moving the loans to the fund, Barclays will insulate its earnings from changes in the fair value of the assets that caused 1.2 billion pounds of pretax losses last year. It will only take a writedown on the loan if cashflow from the assets is impaired, the bank said.

Protium is a way for Barclays to “wriggle free from its toxic assets,†said Simon Maughan, an analyst at MF Global Securities in London, who has a “buy†rating on the lender. “They are still on the hook from a regulatory perspective and if the assets explode, they won’t pay the loan back.â€

$3.9 Billion of Interest

Protium’s partners will get any excess cash in the fund after repaying the 10-year loan from Barclays, the bank said. Management fees and distributions to partners of about $40 million a year will be paid before interest and principal payments on the Barclays loan, Finance Director Chris Lucas told journalists on a conference call today.

Barclays may receive $3.9 billion of interest over the life of the loan, Lucas said. The cashflow from the assets is equal to $100 million to $120 million a month, he said.

“They’re giving up a potential recovery for more predictable cashflow,†said Simon Adamson, an analyst at CreditSights in London. “If things go wrong, any impairment charge on the loan would probably be smaller, or less volatile, than a fair value write-down on the assets.â€

About 45 former employees of Barclays Capital, the securities unit of Barclays, are joining Protium, which will also seek to manage assets from third parties, Lucas said. Keeley and King, who previously worked in structured finance at Credit Suisse First Boston, went directly from Barclays Protium, the bank said.

Managing Risk

The assets being transferred to Protium include $8.2 billion of investments linked to bond insurers and $2.3 billion of mortgage- and asset-backed debt, Barclays said.

“This transaction is part of an ongoing process to manage and reduce our credit market exposures and is a further step in managing that risk,†Lucas said.

Barclays rose 3 percent to 380 pence today in London trading, valuing the bank at 41.9 billion pounds. It is the best-performing U.K. bank stock this year.

Unlike U.K.-based Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, Barclays avoided taking a government bailout during the credit crisis. The bank has bolstered capital by seeking cash from Middle Eastern investors and selling its Barclays Global Investors unit for $13.5 billion to U.S. money manager BlackRock Inc.

Thanks to Bloo Loo for heads up.

$40m upfront in fees to the banksters BEFORE interest or repayment on the loan to Barclays.

Hard work this bankster lark innit.

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http://www.bloomberg.com/apps/news?pid=206...id=as5f4rMU.gbE

Thanks to Bloo Loo for heads up.

$40m upfront in fees to the banksters BEFORE interest or repayment on the loan to Barclays.

Hard work this bankster lark innit.

so they still got the worthless assets on the books.

they now have a new asset as a loan to Protium, on which they pay themselves fees out of the remaining pool of investors.

Protium takes the hit.

its a scam much like banks buying defaulters homes through a shell. QE working hard for the good of the nation.

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So what will the "two former executives" actually have to do for the money?

Is this a way of grossly enriching them with QE cash for not actually having to do very much?

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So what will the "two former executives" actually have to do for the money?

Is this a way of grossly enriching them with QE cash for not actually having to do very much?

Do? I'm not sure I understand the question...........

You mean on top of putting in their orders for new Astons and planning how to spend their windfall in 10 years?

Err......nope.....you got me there :unsure:

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If only our glorious nation had more of these inventive, innovative bankers dreaming up similar schemes at our other banks the miracle economy might still be saved. Quick someone let Gordon know.

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All they are doing is putting the assets into a seperate entity so any reduction in the asset value wont effect their bonuses.

I expect these "investors" investing £450m will lose the lot and are just being scammed.

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All they are doing is putting the assets into a seperate entity so any reduction in the asset value wont effect their bonuses.

I expect these "investors" investing £450m will lose the lot and are just being scammed.

course not, these assets are all AAA, part of the deal was the monoline insurance.

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I expect these "investors" investing £450m will lose the lot and are just being scammed.

Exactly who are the "investors" anyway? Please tell me they are pension funds. I don't mean to be horrible, really I don't - I just want a reason to be glad I haven't been paying into a pension.

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All they are doing is putting the assets into a seperate entity so any reduction in the asset value wont effect their bonuses.

I expect these "investors" investing £450m will lose the lot and are just being scammed.

not much compared to the 12bn from barclays is it?

where is that 12bn from?

new money?

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I sn't this just loan consolidation just like the debt consolidation garbage Barclays sold through their subsidiary First Plus. We all know where that led.

no its not.

Its money laundering.

Mafia man has a bag of cash from a fraud deal. He gives it to his banker who runs it through a ligit company and it comes out the other end...clean.

Bankster has a bag of toxic turds on his books...reducing in value and causing earache as the mark to market is different to what they have told shareholders the value is.

so the "sell" the debt at par to another company...except the other company is closely tied and has no money. so what does the company do...it borrows the money...not from another bank, not from bond issues, but from its seller...Bankster... so now bankster has a nice new asset in the form of a loan and the toxic stuff is not its problem.

Money Laundering.

Your QE working hard

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no its not.

Its money laundering.

Mafia man has a bag of cash from a fraud deal. He gives it to his banker who runs it through a ligit company and it comes out the other end...clean.

Bankster has a bag of toxic turds on his books...reducing in value and causing earache as the mark to market is different to what they have told shareholders the value is.

so the "sell" the debt at par to another company...except the other company is closely tied and has no money. so what does the company do...it borrows the money...not from another bank, not from bond issues, but from its seller...Bankster... so now bankster has a nice new asset in the form of a loan and the toxic stuff is not its problem.

Money Laundering.

Your QE working hard

and let's not forget that the bankster who originally bought all the toxic stuff for Barclays, we'll call him Mr Pink for now, is also taken off the books and given $400m over ten years, plus a bonus, for err how can I put this delicately, 'managing' the 'assets' in the new hedge fund that obviously has nothing to do with Barclays.

Bingo! Clean hands.

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and let's not forget that the bankster who originally bought all the toxic stuff for Barclays, we'll call him Mr Pink for now, is also taken off the books and given $400m over ten years, plus a bonus, for err how can I put this delicately, 'managing' the 'assets' in the new hedge fund that obviously has nothing to do with Barclays.

Bingo! Clean hands.

not forgetting its build up to bonus time, so whoever brokered the deal is in for a nice christmas.

Just wondering how they did the due diligence on the security offered by Protium....maybe they got Moodys to rerate it.

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and let's not forget that the bankster who originally bought all the toxic stuff for Barclays, we'll call him Mr Pink for now, is also taken off the books and given $400m over ten years, plus a bonus, for err how can I put this delicately, 'managing' the 'assets' in the new hedge fund that obviously has nothing to do with Barclays.

Bingo! Clean hands.

Clean hands?

Me and you can see them, other people can see them - they are filthy. Once the shortages start, these guys will be hunted down.

They are crazy - it's reckless to the point of suicide to do this sort of thing.

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no its not.

Its money laundering.

Mafia man has a bag of cash from a fraud deal. He gives it to his banker who runs it through a ligit company and it comes out the other end...clean.

Bankster has a bag of toxic turds on his books...reducing in value and causing earache as the mark to market is different to what they have told shareholders the value is.

so the "sell" the debt at par to another company...except the other company is closely tied and has no money. so what does the company do...it borrows the money...not from another bank, not from bond issues, but from its seller...Bankster... so now bankster has a nice new asset in the form of a loan and the toxic stuff is not its problem.

Money Laundering.

Your QE working hard

Here's hoping for a fall-out at the annual golf tournament and the mother of all margin calls.

"Dear Messrs King and Keeley,

We've reassessed that value of your security against your loan.

The security is now evaluated at $3 billion.

Grateful if you could pop a cheque in the post for £10 billion to arrive within 28 days.

Your former mates on the board,

Barclays"

p-o-p

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course, Ireland buying all the turds from Irish banks with a 30% Haircut, means A: there is a market value at 30% off and B: the Irish people have overpaid by about 600bps.

bankers in Ireland should have a max salary and remuneration package of 25K...they are after all, bankrupt and would be out of a job otherwise.

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