Mortgages  

Treasury sells off Bradford & Bingley loans to Prudential

Treasury sells off Bradford & Bingley loans to Prudential

HM Treasury has agreed to sell £11.8bn of Bradford & Bingley loans it acquired during the financial crisis.

The portfolio of loans, which has a “strong credit quality”, will be sold to Prudential and to funds managed by Blackstone.

The money raised by the sale will be used to pay off Bradford & Bingley’s £15.65bn debt to the Financial Services Compensation Scheme and, in turn, the corresponding loan from the Treasury.

Chancellor of the Exchequer Philip Hammond said: “The sale of these Bradford & Bingley assets for £11.8bn marks another major milestone in our plan to get taxpayers’ money back following the financial crisis.

“We are determined to return the financial assets we own to the private sector and today’s sale is further proof of the confidence investors have in the UK economy.”

The Treasury has said there will be no changes to the terms and conditions of the loans, and borrowers will not need to take any action.

UK Asset Resolution manages Bradford & Bingley and Northern Rock Asset Management’s closed loan books on behalf of the taxpayer.

Following today’s announcement, its balance sheet stands at £22bn, down from £37bn in September 2016 and from £116bn in 2010.

The Government announced in the 2016 Budget that it would explore such a sale to raise money to pay off the FSCS, with today’s sale the first in this programme.

The Treasury has said the programme of sales is expected to conclude in full before the end of 2017/18 but any further sales will be subject to market conditions and value for money.

In November 2015 the government sold £13bn sale of Northern Rock mortgages acquired during the financial crisis to US private equity firm Cerberus Capital Management.

Following the subprime mortgage crisis in 2008 Bradford & Bingley was nationalised and split up, with its deposits and branch network sold to the Santander Group.

damian.fantato@ft.com