The portfolio consists mostly of interest-rate swaps, reports Bloomberg, which would mean they're likely less risky and capital consumptive than equity or credit derivatives. The move, however, is part of Barclays' (BCS -2.5%) larger plan to speed exits of assets with high capital requirements. The size of the portfolio wasn't disclosed, but derivatives make up half of the risk-weighted assets in the bank's non-core unit. "Integrating this portfolio into our own business reiterates our commitment to the broader fixed-income markets and creates the opportunity for us to work with a wider range of clients over the long-term,” says JPMorgan (JPM -2.2%), which has a large derivatives portfolio giving it the chance to offset new positions with old, thus reducing the capital impact.
Barclays is to transfer a portfolio of derivatives contracts to JPMorgan as part of the UK bank's ongoing plan to sell unwanted assets so as to reduce its capital requirements. The portfolio consists primarily of interest-rate swaps, many of which are backed by collateral that will transfer to JPMorgan. Barclays' move comes after it was revealed last week that the bank had been forced into an emergency £290m funding package from the US government in order to avoid running out of cash. UK banks are under regulatory pressure to shore up their capital buffers and get rid of risky or toxic assets from their balance sheets.