Treasury to sell Â£11.8bn of Bradford & Bingley loans

File photo dated 29/09/08 of a branch of mortgage lender Bradford & Bingley in Chelmsford, Essex. UK Asset Resolution - the taxpayer owned company formed from the merger of Bradford & Bingley (B&B) and Northern Rock Asset Management - reported underlying profits of Â£200 million at B&B in 2010 against losses of Â£166.5 million in 2009. PRESS ASSOCIATION Photo. Picture date: Thursday March 31, 2011. See PA story CITY UKAR. Photo credit should read: Ian Nicholson/PA Wire

The Government said the funds would be sold to Prudential and Blackstone and delivered “value for money” for the taxpayer.

Mr Hammond said: “The sale of these Bradford & Bingley assets for £11.8 billion 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 Government said the price reflected the “strong credit quality” of the portfolio and was the result of a highly-competitive sale process.

It added that borrowers would not need to take action because there would be no change to the terms and conditions of the loans sold.

UK Asset Resolution (UKAR) manages Bradford & Bingley and NRAM’s closed loan books on behalf of the taxpayer.

Ian Hares, UKAR chief executive, said: “This sale of assets is a significant milestone in the phased repayment of the FSCS loan extended to Bradford & Bingley and when complete will reduce UKAR’s balance sheet to £22 billion from £116 billion in 2010 when it was formed.

“We are very pleased with the price achieved which delivers excellent value for the taxpayer.

“The transaction delivers against our overarching objective to develop and execute divestment strategies which protect and maximise value for the taxpayer whilst treating customers fairly.”

The sale is expected to be completed by 2017/18, with any further sales being made subject to market conditions, the Government added.

Bradford & Bingley’s customer deposit book was shifted to Santander UK and replaced by loans from the Financial Services Compensation Scheme (FSCS) and the Treasury when the firm was taken into public ownership in 2008.

The sale is the first part of Government plans announced during the 2016 Budget to repay £15.65 billion to the FSCS and the corresponding loan from the Treasury.

It comes as the Government continues to drive down its stake in Lloyds Banking Group, cutting it to below 3% on March 15.

More than £19.5 billion has now been returned to Government coffers since the lender’s £20.3 billion bailout at the height of the financial crisis.

The Government was forced to step in and bail out Royal Bank of Scotland and Lloyds Banking Group during the banking crisis, while it also nationalised lender Northern Rock and Bradford & Bingley.