Mortgages  

Treasury completes Northern Rock mortgage sale

Treasury completes Northern Rock mortgage sale

The ‘record breaking’ £13bn sale of former Northern Rock mortgages was completed today (5 May) with the government receiving the final £520m from Cerberus.

The mortgages, which were originally owned by Northern Rock and acquired by the government during the financial crisis, were sold to Cerberus by the state-owned limited company UK Asset Resolution.

The sale, authorised by chancellor George Osborne on 13 November, is the largest ever financial asset sale by a government in Europe, with UKAR selling the portfolio for £280m more than their book value.

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The government stated taxpayers will now definitely get back more money from Northern Rock than they were forced to put in during the financial crisis, with this sale meaning it has sold off more than 85 per cent of the assets of the former bank.

There will be no changes to the terms and conditions of the mortgages sold and customers do not need to take any action.

Economic secretary to the Treasury Harriett Baldwin added: “Today’s receipt of the final funds from this sale mean that we now have even further confidence that taxpayers will get back more money from Northern Rock than they were forced to put in during the financial crisis.”

Earlier this week, UKAR entered into a binding agreement for the transfer of Bradford & Bingley mortgage servicing operations to Computershare, with the seven-year contract covering £30bn of assets.

The sale of the state’s stake in Royal Bank of Scotland has been less successful, with the process beginning last August at a 5.4 per cent of the bank for a price of £3.30 per share.

This raised £2.1bn to be used to pay down the national debt, but also meant a taxpayer loss of around £1bn due to pricing compared to the price the government bought the bank for following the financial crisis.

At the end of November, the government committed to selling more than £25bn of shares in RBS over the next parliament, along with fully divesting from Lloyds Banking Group by this spring.

However, at the end of January the chancellor delayed the £2bn sale of the government’s stake in the Lloyds until the markets have “calmed down”. The shares were expected to go on sale to members of the public in March.

peter.walker@ft.com