Bradford & Bingley mortgage sale raises £11.8bn

Chancellor Philip Hammond has confirmed the sale of £11.8bn worth of publicly owned mortgage loans related to defunct lender Bradford & Bingley.

The Government said the loans would be sold to Prudential and Blackstone and delivered "value for money" for the taxpayer.

Bradford & Bingley was effectively nationalised by the then Labour government in 2008 in a series of bailouts as banks and financial institutions were engulfed by the global financial crisis.

UKAR, which was advised by Credit Suisse, said there would be no changes to the terms and conditions of the buy-to-let loans involved in the transaction.

At Budget 2016, the government announced that it would explore a programme of sales created to raise sufficient proceeds for B&B to repay the 15.65 billion pounds debt to the Financial Services Compensation Scheme or FSCS and, in turn, the corresponding loan from the Treasury.

Comments from the Treasury noted that the price-tag for the mortgage arm of the firm, which also offers vehicle and home insurance, "reflects the strong credit quality of the portfolio and the outcome for a highly competitive sale process".

UKAR said in 2016 it would sell Bradford & Bingley's £15.65 billion mortgage portfolio, which also includes around £3 billion in non-performing loans, in two or three tranches, as it seeks to recoup taxpayers' money. We are very pleased with the price achieved which delivers excellent value for the taxpayer.

The overall size of UKAR's balance sheet stands at £22bn after the sale of the loans, down from £37bn in September a year ago and £116bn in 2010.

The sale is expected to be completed by the end of fiscal year 2017/18.

It also oversees the government's stake in both Lloyds and Royal Bank of Scotland.

Today's sale is the first in the programme.

  • Zachary Reyes