UK government pockets £11.8bn from sale of B&B assets

Blackstone and Prudential were the buyer of two separate portfolios of buy-to-let mortgage loans underwritten by Bradford & Bingley.

The UK government will collect £11.8 billion ($14.8 billion; €13.8 billion) from the sale of buy-to-let mortgages originated by Bradford & Bingley to insurance firm Prudential and Blackstone.

Across the two portfolios are a total of 104,000 loans provided to 57,000 borrowers by the bank previously nationalised by the UK government at the height of the global financial crisis.

A statement from the UK Asset Resolution (UKAR), the body set up in 2010 to manage deleveraging Bradford & Bingley and Northern Rock Asset Management’s portfolio of loans, said the price is at the “upper end of expectations”. The book value of the loans was £12.2 billion and interest at each loan was 2 percent.

Under the terms of the agreement, there will be no changes to the borrowers’ terms and conditions, the statement said.

Further details of the assets were not disclosed. Prudential declined to comment. Blackstone did not respond to a request for comment by time of publication.

The total amount will go back to repaying a £15.65 billion loan provided by the Financial Services Compensation Scheme (FSCS) followings the bank’s nationalisation and its corresponding loan from the Treasury.

Through the UKAR, the FSCS is expected to complete the full repayment of the loan by 2018 with further sales of Bradford & Bingley assets.

Prior to the sale of the assets, a consortium of institutional lenders, including Barclays, HSBC, Lloyds, Nationwide, RBS and Santander, lined up a debt package for prospective buyers.

“This sale of assets is a significant milestone in the phased repayment of the FSCS loan extended to Bradford & Bingley,” Ian Hares, chief executive of UKAR, said in the statement.

“We are very pleased with the price achieved which delivers excellent value for the taxpayer. The transactions deliver against our overarching objective to develop and execute divestment strategies which protect and maximise value for the taxpayer while treating customers fairly,” he added.

In a statement issued by the UK’s HM Treasury, chancellor Philip Hammond said, “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.”