LONDON (Alliance News) - The credit-card issuer Barclaycard, a unit of Barclays PLC, sold USD1.6 billion of credit-card balances owed by mostly near-prime and subprime borrowers to privately held personal-loan firm Credit Shop Inc, the Wall Street Journal reported citing people familiar with the matter.
The deal marks the first time that Austin, Texas-based Credit Shop, which is mostly focused on extending personal loans to near-prime and subprime borrowers, purchased credit-card accounts and balances.
The firm, which launched in 2013 and counts Chinese firm Renren Inc as an investor, is planning on launching its own credit card later this year, according to the Journal. Several executives at Credit Shop were previously with Barclaycard.
Subprime card issuance has been on the rise in recent years, partly as some banks have grown more comfortable taking on more risk and some non-bank lenders enter the card market for risky borrowers.
At the same time, there is growing anxiety among investors and some lenders that a turn in the credit cycle could be near and that losses could soon rise. Card defaults, while still near record lows, have been on the rise recently. Several large lenders also recently reported jumps in charge-offs, which are unpaid balances that lenders write off as losses when they don't expect borrowers to pay them.
Copyright RTT News/dpa-AFX, source Alliance News