British lender Barclays has agreed to sell around $1.1bn of credit card debt in the US to Blackstone Credit & Insurance (Blackstone), to expand lending capacity and reduce risk.

Barclays Bank Delaware (BBDE) has signed the agreement with insurance accounts managed by Blackstone’s asset-based finance group, to sell the credit card debt.

Under the terms of the transaction, BBDE will enter a long-term strategic forward flow sale and servicing arrangement with Blackstone related to the credit card accounts.

Blackstone intends to fund the transaction entirely on behalf of its insurance clients.

Barclays Bank will also fund the transaction alongside Blackstone’s insurance accounts.

The transaction, subject to certain conditions, is expected to be completed in Q1 2024.

Upon closing, BBDE will retain the legal title for the credit card accounts and will continue to service the accounts for a fee.

Barclays Group finance director Anna Cross said: “During our Investor Update, we said that we would leverage strategic partnerships to execute risk transfer agreements to reduce capital requirements. I am delighted to announce this first agreement in our US cards book.”

Barclays US Consumer Bank and BBDE CEO Denny Nealon said: “We’re pleased to partner with an industry leader like Blackstone on this transaction that will help fund lending activities and support the long-term growth ambitions for our US Consumer Bank.

“BBDE will continue to service the accounts, providing cardmembers with the high level of service they have come to expect.”

It is the British lender’s first move in a series of activities aimed at reducing its risk-weighted assets (RWAs) and creating additional lending capacity for BBDE.

The transaction is expected to release around £1bn of RWAs on a post-internal ratings-based (IRB) approach basis at Barclays’ consolidated level.

BBDE intends to use the proceeds from the transaction to fund its lending activities.

Barclays Bank, acting through its Investment Bank, served as the exclusive structuring advisor, along with risk retainer and liquidity facility provider to Blackstone, on this transaction.

Blackstone Infrastructure and Asset Based Credit global head Robert Horn said: “This collaboration demonstrates how we are supporting leading financial institutions with large-scale, long-term, efficient capital solutions in the asset-based finance markets.

“Barclays has a premiere franchise in structured products and consumer banking and we look forward to working with them in the coming years to grow the partnership.”