LONDON (Reuters) - Britain has sold a portfolio of mortgages issued by failed lender Bradford & Bingley for 11.8 billion pounds to insurer Prudential (PRU.L) and buyout firm Blackstone (BX.N) in one of the biggest deals of its kind.
The British government forecast this month that it will make a 23.5 billion pound loss on the cost of bailing out the country’s failed banks at the height of the financial crisis.
It spent more than 136.6 billion pounds ($170 billion)rescuing some of Britain’s biggest high street lenders, including Royal Bank of Scotland (RBS.L) and Lloyds Banking Group (LLOY.L), but has so far only managed to recoup half of that money.
Bradford & Bingley (B&B), a mortgage provider which was also bailed out during the financial crisis, is owned by British government vehicle UK Asset Resolution (UKAR).
“The price achieved is at the upper end of expectations, delivers value for the taxpayer and compares favourably with the ‘fair value’ of the B&B loan book disclosed in B&B’s accounts last year,” UKAR said in a statement on Friday.
UKAR Chief Executive Ian Hares, who declined to say how many bidders were involved, said the loans had a carrying value of 12.2 billion pounds resulting in an accounting loss for the state run ‘bad bank’.
The sale is one of the biggest asset sales by a government in Europe, Hares said, but is smaller than the 13 billion pound sale of Northern Rock mortgages in 2015.
It will reduce UKAR’s balance sheet to 22 billion pounds, which is about a 50-50 mix of residential and buy-to-let mortgages. It stood at 37 billion pounds in September 2016 and 116 billion pounds in 2010 when it was formed.
UKAR said in 2016 it would sell Bradford & Bingley’s 15.65 billion pound mortgage portfolio, which also includes around 3 billion pounds in non-performing loans, in two or three tranches, as it seeks to recoup taxpayers’ money. [nL3N1CA2LN]
On Friday it said it expects to launch the next phase of sales later this year, although Hares said there was no target date for the disposal of the remaining assets.
UKAR, which was advised by Credit Suisse, said there would be no changes to the terms and conditions of the buy-to-let loans involved in the transaction.
($1 = 0.8027 pounds)
Additional reporting by Andrew MacAskill; Editing by Susan Fenton and Alexander Smith