Barclay branches into US online banking

Barclays' US operation is getting into the online-banking business as it works to diversify funding for its growing credit-card operations, Market Watch reports.

The British bank said Monday it is offering a high-yield savings account and certificates of deposit through its Barclays Bank Delaware subsidiary. The online-only products are the first deposit accounts Barclays has offered in the US since the early 1990s, when it exited the branch-banking business there.

According to Brand Channel, in addition to making deposits, individuals will be able to link existing checking accounts at other banks directly to Barclays online savings accounts.

The online move extends its US credit card arm, which issues co-branded credit cards with companies including retailer LL Bean and US Airways. It also comes as Discover, American Express and Capital One are all growing the online-banking parts of their businesses.

eCreditDaily notes that Barclays' US credit card unit is taking deposits to facilitate cheaper funding for its roughly $12 billion of card assets.

A new Barclays Web site will compete on rates for high-yield savings accounts and for certificates of deposit with Ally Financial, CIT Group and ING Direct, which is now a unit of Capital One Financial Corp.

Barclays does not operate retail branches in the US. It has provided credit cards for US consumers through its Barclaycard unit since it acquired a Delaware-based lender in 2004. Barclays reportedly has no plans at this time to expand its US retail business.