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Government raises £11.8bn with Bradford & Bingley mortgage sale Government raises £11.8bn with Bradford & Bingley mortgage sale
(about 1 hour later)
Chancellor Philip Hammond has triggered the sale of an £11.8bn package of Bradford & Bingley loans bought by the taxpayer at the height of the financial crisis. The chancellor has triggered the sale of an £11.8bn package of Bradford & Bingley loans bought by the taxpayer at the height of the financial crisis.
The loan book will be sold to the insurer Prudential and US private equity firm, Blackstone, after what the Treasury described as “a highly competitive sale process”. The loan book will be sold to the insurer Prudential and US private equity firm Blackstone, after what the Treasury described as “a highly competitive sale process”.
Hammond said the deal delivered value for money for UK taxpayers. “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. Philip Hammond said the deal delivered value for money for UK taxpayers. “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.”“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 Treasury said it would be the first in a series of sales that will allow Bradford & Bingley to repay its £15.65bn debt to the Financial Services Compensation Scheme (FSCS) and corresponding loan from the Treasury. It expects the process to be concluded before the end of the 2017-18 fiscal year.The Treasury said it would be the first in a series of sales that will allow Bradford & Bingley to repay its £15.65bn debt to the Financial Services Compensation Scheme (FSCS) and corresponding loan from the Treasury. It expects the process to be concluded before the end of the 2017-18 fiscal year.
“Any further sales will be subject to market conditions and ensuring value for money,” the Treasury said.“Any further sales will be subject to market conditions and ensuring value for money,” the Treasury said.
Bradford & Bingley was effectively nationalised by the then Labour government in 2008 in a series of bailouts as banks and financial institutions were engulfed by the global financial crisis.Bradford & Bingley was effectively nationalised by the then Labour government in 2008 in a series of bailouts as banks and financial institutions were engulfed by the global financial crisis.
B&B’s mortgage book and investment portfolios were transferred to government control, while Spanish bank Santander bought its network of branches and deposits. Its mortgage book and investment portfolios were transferred to government control, while Spanish bank Santander bought its network of branches and deposits.
UK Asset Resolution (UKAR), established in 2010, manages Bradford & Bingley’s loan books on the Treasury’s behalf. The latest deal will leave UKAR with a £22bn balance sheet, down from £37bn in September 2016 and £116bn in 2010.UK Asset Resolution (UKAR), established in 2010, manages Bradford & Bingley’s loan books on the Treasury’s behalf. The latest deal will leave UKAR with a £22bn balance sheet, down from £37bn in September 2016 and £116bn in 2010.
The Treasury is also pressing ahead with plans to fully offload its stake in Lloyds Banking Group, which now stands at below 3%. When the bank was bailed out in 2008, the taxpayer owned a 43% stake. More than £19.5bn has been returned to the public purse since the original £20.3bn state rescue.The Treasury is also pressing ahead with plans to fully offload its stake in Lloyds Banking Group, which now stands at below 3%. When the bank was bailed out in 2008, the taxpayer owned a 43% stake. More than £19.5bn has been returned to the public purse since the original £20.3bn state rescue.
While the government is selling off its stake in Lloyds, it retains a 73% stake in Royal Bank of Scotland which it also bailed out during the financial crisis. While the government is selling off its stake in Lloyds, it retains a 73% stake in Royal Bank of Scotland, which it also bailed out during the financial crisis.
Hammond said in October that the time was not right to sell its stake in the Edinburgh-based bank.Hammond said in October that the time was not right to sell its stake in the Edinburgh-based bank.