Q & A

<strong>Q.WHY HAS BARCLAYS SPUN OFF THESE ASSETS?</strong><br />A.According to Barclays finance director Chris Lucas, the sale will reduce the bank&rsquo;s exposure to potential deterioration of the assets and give it access to &ldquo;stable risk-adjusted returns for shareholders over time&rdquo;.<br /><br /><strong>Q.DOES THE SALE REDUCE THE BANK&rsquo;S RISK PROFILE?</strong><br />A.Not really. Although the bank will be less exposed to writedowns from having to mark the assets to market, it still risks impairment on the $12.6bn loan it makes to Protium, should the fund fail.<br /><br /><strong>Q.HOW DOES BARCLAYS BENEFIT?</strong><br />A.While the bank will not really rid itself of risk relating to the assets,&nbsp; it will no longer live in fear of the failure of&nbsp; its monoline insurers, which would have triggered write-offs on some of its assets. Its exposure is now to the success of the new fund, rather than to highly volatile mark-to-market credit valuations.<br /><br /><strong>Q.WHY IS THE LOAN GREATER THAN THE ASSET VALUE?</strong><br />A.The extra $300m provided by Barclays, coupled with a $450m injection from Protium&rsquo;s partners, will give the fund working capital to help it get off the ground.<br /><br /><strong>Q.WHO WILL MANAGE PROTIUM?</strong><br />A.Fund management company C12 Capital Management, run by former Barclays Capital employees Stephen King and Michael Keely.