HM Treasury  

Lender bail-out loan repaid in full

Lender bail-out loan repaid in full

UK Asset Resolution has fully repaid the £48.7bn that was funded by the government as part of a rescue package of lenders after the financial crisis, its yearly results have shown.

Ukar is the holding company of the government owned NRAM (formerly Northern Rock) and Bradford & Bingley businesses, created in 2010 to manage the winding down of these lenders in an orderly way.

In Ukar’s results for the year to the end of March, the nicknamed "bad bank" reported that all outstanding Bradford & Bingley and NRAM government loans from HM Treasury were repaid.

It will now look to dispose of the government’s investments in both companies.

According to the results, the total number of customers fell by 96,000 to 35,000 in the year to March 31, reducing the lending balance to £5.5bn.

The number of mortgage customers in three or more months in arrears reduced by 14 per cent and the bank put this down to proactive arrears management in a low interest rate environment.

Assets on the company’s balance sheet reduced by £8.4bn to sit at £11.4bn following the sale of a number of portfolios — the second phase of Bradford & Bingley, £860m of equity release loans to Rothesay Life Plc, and £100m worth of commercial loans to Davidson Kempner and Arrow Global.

Ian Hares, chief executive of Ukar, said: "I am delighted that, in under ten years, we have been able to repay in full the government loan of £48.7bn. 

"The final payment followed the completion of the sale of the two NRAM portfolios. 

"In turn we’ve been able to reduce and simplify our balance sheet which is 94 per cent smaller since formation."

He added: "Looking forward, we are focused on the disposal of the remaining government investments in NRAM and Bradford & Bingley while ensuring that customers are appropriately protected."

The selling of government loans came under scrutiny in April when the Treasury sold old NRAM loans to inactive lender Citi.

Concerns were raised this would create more mortgage prisoners — those who could get a cheaper deal elsewhere but are blocked from switching — but the government rebutted it had been unable to find an active lender for the deal.

imogen.tew@ft.com

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