NEW YORK (Reuters) - Barclays Plc (>> Barclays PLC) will no longer make markets for mortgage-backed bonds issued prior to the financial crisis as they have become less profitable under tighter British regulations on these securities, a bank spokesman said on Wednesday.

Barclays will reallocate resources to other areas of its U.S. mortgage business with no traders expected to lose their jobs, according to Bloomberg, which first reported the move by Britain's second biggest bank in a part of the U.S. mortgage-backed securities market worth $700 billion.

Barclays spokesman Mark Lane confirmed the bank's decision, following Royal Bank of Scotland Group Plc (>> Royal Bank of Scotland Group plc) which said in November it will pull out of the U.S. mortgage market.

U.K. regulations now require banks to hold even more capital against junk-rated bonds. Some older U.S. MBS not backed by the government have seen their ratings slashed down to speculative status after mortgage defaults soared when the housing bubble burst.

(Reporting by Richard Leong; Editing by Tom Brown)

Stocks treated in this article : Barclays PLC, Royal Bank of Scotland Group plc