UK ASSet Resolution, the bank behind failed lenders Northern Rock and Bradford & Bingley, yesterday revealed that it could pay off all the money owed to the Government within ten years.
UKAR confirmed that it has repaid £10.4bn to the Government as rising house prices and low interest rates encourage borrowers to look elsewhere for deals.
The amount returned since the 2010 formation of UKAR – the state-owned firm responsible for winding down the mortgage books of the collapsed banks – includes £5.1bn in the 15 months to March 31.
Richard Banks, the chief executive of UKAR, which is based in Crossflatts, West Yorkshire, told The Yorkshire Post: “We expect to pay the majority if not all of the money owed to the Government in the next 10 years – but there are many components and moving parts.
“The interesting fact is that when we’ve repaid the Government debt in circa 10 years’ time, the last mortgage isn’t due to be repaid until 2049.”
UKAR said: “A lot of good work has been achieved to date and we expect to repay the remaining £38.3bn debt in full.”
An 11 per cent reduction in UKAR’s loan book over the 15 months has been driven by mortgage redemptions, leaving it with 467,000 customers and 529,000 mortgage accounts.
More than 93 per cent of borrowers are up to date with their payments, with mortgage accounts three or more months in arrears, including possessions, down by 39 per cent to 15,483 since December 2012.
UKAR said: “House prices have increased faster than expected over the past 15 months, which, combined with continued low rates of interest, is good news for our customers and has driven increased redemption activity.
“However, despite the more positive conditions, many households continue to be under financial pressure.”
Philip Davies, the Conservative MP for Shipley, has called on ministers to look at whether a modern-day bank could be born from UKAR, arguing that it would bring competition to the banking sector and protect 1,200 jobs in his constituency. Mr Davies said the creation of a challenger bank could secure hundreds of jobs in Yorkshire and provide compensation for those who lost their savings.
He said yesterday: “These are very strong figures from UKAR and it is clear that when Bradford & Bingley has been finally wound up there will be a considerable financial surplus. This money should be given to the shareholders of Bradford & Bingley who had their shareholding confiscated from them by the last Government.”
Peter Clokey, an independent valuer appointed by the Treasury, determined that no compensation should be payable to anybody who held shares in Bradford & Bingley immediately before they were transferred to public ownership.
A UKAR spokesman said: “On the point about the prospect of former shareholders getting money back from the future re-emergence of the business, which is a speculative point, I must stress that this would not be a decision for Richard Banks, or indeed UKAR, to make.”