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 The Arch Bishop of Canterbury earlier this week called on U.K. bankers to repent for doing the kinds of deals that landed the global economy in its present state, so he might be dismayed to read about Barclays plc's (NYSE:BCS) latest deal to unload some debt assets. According to the U.K.'s Guardian: There was a mass walk-out at Barclays yesterday. Some 45 highly paid financial engineers upped sticks to form an asset manager called C12 Capital Management, which has a contract with an outfit called Protium Finance. Don't ask who is behind Protium because the partners don't want to say, and that's the way life is in the Cayman Islands. These arrangements carry Barclays' blessing, of course. In fact, the bank is very excited about dispatching $12.3bn of credit market assets (toxic junk to the rest of us) to Protium while also providing a loan of $12.6bn to the fund. C12 will be headed up by two of Barclay's top bankers -- Stephen King and Michael Keeley -- and the $12.6 billion loan is for 10 years. All of this left analysts wondering why do the deal, especially since Barclays's finance director, Chris Lucas, admitted on a conference call that "the bank might need to hold more capital as a result of the deal which in itself would not create a profit or a loss for the bank," according to the Guardian, and especially at a time when U.K. regulators are stressing more transparency in the banking sector. The most likely answer -- mark-to-market accounting. The assets being sold include residential mortgage assets, collateralized debt obligations and other debt products, which have been a source of continuous write-downs for Barclays -- a £1billion ($1.6 billion) loss in 2008 -- thanks to mark-to-market accounting. For its part C12 is expected to book a tidy profit on its 10 years of managing the asset, whose value has already been written down significantly. As the Guardian puts it: The other winners, probably, will be the 45 evacuees from Barclays. They are not, we are assured, the same folk who brought the junk into the bank in the first place. But they wouldn't be departing unless they thought they stood an excellent chance of making even more money than Barclays would pay them over the next decade. Welcome to the new, transparent world of banking. Ain't it marvellous? - George White
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