Philip Hammond

Philip Hammond authorises £11.8bn Bradford & Bingley loan sale

Chancellor of the exchequer Philip Hammond has approved an £11.8bn sale of Bradford & Bingley (B&B) loans to Prudential and funds managed by Blackstone.

The loans were previously managed by UK Asset Resolution (UKAR), which services B&B and NRAM’s closed loan books on behalf of the taxpayer.

Allowing for this transaction, UKAR’s balance sheet now stands at £22bn, down from £37bn in September 2016 and £116bn in 2010.

Mr Hammond said: “The sale of these Bradford & Bingley assets for £11.8bn 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 sale will have no impact on the terms and conditions of the loans sold and borrowers do not need to take any action.

HM Treasury said the price was indicative of the strong credit quality of the portfolio and marked the result of a highly competitive sale process.

It also stated the deal offered value for money for the taxpayer and compared favourably with the “fair value” of the B&B loan book disclosed in the former bank’s accounts last year.

The fair value of the B&B loan book is less than its book value, reflecting the low interest rates payable on the loans.

The deal follows an announcement in the Budget 2016 that the government would explore a programme of sales to raise sufficient proceeds for B&B to repay the £15.7bn debt to the Financial Services Compensation Scheme and the corresponding loan from the Treasury.

The programme of sales is expected to conclude in full before the end of 2017-18. Any further sales will be subject to market conditions and ensuring value for money.

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