UKAR returns a further £500m to the taxpayer

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UKAR, which is running down the loans of ​​Bradford & Bingley and Northern Rock, said it is making good progress on the sale of both £13bn of assets and its mortgage servicing operation.

The bank repaid ​£​500​m to the ​G​overnment in the six months ​to September​ 30 and said it had a good first half.

UKAR ha​s​ now returned ​£​14.6​bn, or 30 per​ ​cent of ​its​ loan to the​ G​overnment, and it reduced the size of its balance sheet by ​£​8.5​bn during the ​first half​.

UKAR is winding down the loans of ​​​the ​two bailed out lenders, which were nationalised during the financial crisis of 2007 to 2009.

​The bank said its first-half underlying pre-tax profit fell to £612.1m, from £692.9m this time last year due to the gradual running down of the mortgage book.

Richard Banks, UKAR chief executive, said: “This has been a good first half. Our objective is to wind down the balance sheets of Bradford & Bingley and Northern Rock Asset Management.”

He said that the bank expects to complete the sale of £13bn of assets by the end of March next year although he can’t be precise on dates.

He declined to say whether the £13bn book will be broken up and sold off in chunks.

“We are very happy with progress,” he added.

Possible bidders include Spanish bank Sabadell, Royal Bank of Scotland, Citi, Goldman Sachs and Blackstone.

Potential bidders for the mortgage servicing arm include Skipton-based mortgage servicer HML.

Mr Banks said UKAR hope to sell the business, which employs around 1,000 staff at Crossflatts, by next summer, which will secure Crossflatts’ future.

The bank has accepted 50 voluntary redundancies but no more job losses are planned.

“Natural attrition has helped,” said Mr Banks.

“It’s been a relatively painless affair. We had more volunteers than we could let go. Morale has improved and people understand what we are doing. They welcome the transparency.”

UKAR has around 2,000 employees and the hope is that all will keep their jobs when the servicing arm is sold.

Mortgage accounts three or more months in arrears reduced by 9.5 per cent to 10,835.

Operations director Erica Swales and her team are pro-actively contacting customers who go into arrears in order to try to help them if their circumstances have changed.

Statutory profit rose by £182.3m to £856.9m, mainly due to the release of a £268m provision related to a High Court remediation ruling in December that was overturned by the Court of Appeal in July.