Barclays’ deal to sell more than $12.3bn (£7.4bn) of risky credit assets to a new company to try to de-risk its balance sheet seemed to puzzle analysts on Wednesday.

Newly-formed Protium Finance – a fund that will be run by asset management firm C12 – will buy and manage structured credit assets from Barclays.

C12, which is headed by two former Barclays Capital executives Stephen King and Michael Keeley, along with about 43 other staff members, will collect a $40m annual fee for managing the assets.

The assets being acquired include $8.2bn of structured credit securities insured by monolines, $2.3bn of residential mortgage-backed bonds and $1.8bn of unpackaged mortgages. Barclays will support the deal by advancing a $12.6bn 10-year loan on commercial terms (at Libor plus 2.75 per cent) to Protium, which will generate an estimated $3.9bn in interest for the bank.

The remaining funding will come from $450m of new funding provided by the partners of Protium which has been backed by two substantial UK and US institutions.

The deal could prove lucrative for Protium and its ex-Barclays Capital alumni as the cash flow from its assets will be used first to service payment of management fees and distributions to Protium partners and then to repay the Barclays loan.

The issue of limited partner interests in Protium will also entitle investors to fixed payments of 7 per cent a year for 10 years on their initial investment. Any excess cash flow after repayment of the loan to Barclays will also be taken by partners of Protium.

Partners in the funds could also see significant upside to their investment. The £1.7bn of US subprime assets bought by Protium have fallen by more than 82 per cent in value since December 2007, for example.

But analysts appeared puzzled as to why Barclays was doing the deal, particularly as the bank’s capital position was not enhanced.

The risky assets will stay on Barclays’ balance sheet for regulatory purposes and Barclays will not be able to reduce the amount of capital set aside against these loans. It may even mean a rise in regulatory capital.

For accounting purposes, Barclays will not recognise the assets and will not book a gain as the assets are being sold at fair value.

Credit Suisse analysts said Barclays seemed to be “giving up any potential upside on recovery in fair value of assets” in exchange for cash flow stability and improved ability to hold assets to maturity.

“With the $450m piece not exposed to first losses, receiving 7 per cent a year for 10 years, and getting any trapped excess spread (ie upside on assets) this seems like a definite transfer of value away from Barclays.” they said.

There was also concern that there was only a thin equity cushion to absorb potential losses.

Barclays indicated the Protium transaction would remove some mark-to-market risks the bank faces, and may minimise the chance of further writedowns. Chris Lucas, finance director of Barclays, said Barclays had reduced its risky assets and this was a “further step” in managing that risk. He said the deal would help give Barclays a “long-term view of cash flows” and a “stable and risk adjusted return over time”.