British ‘bad bank’ says several parties want to buy assets

16 Jun, 2015 10:23 pm

LONDON – A 13 billion pound mortgage portfolio put up for sale by the “bad bank” charged with winding down the assets of two failed British lenders has lured interest from several possible bidders, the group’s boss said on Tuesday.

UK Asset Resolution (UKAR), which is selling off the loans of bailed-out Northern Rock and Bradford & Bingley, said in April it was selling the portfolio, named Granite, along with its mortgage servicing operations, aiming to speed up the repayment of taxpayers’ money.

“We have had indicative expressions of interest on both transactions from several parties,” UKAR Chief Executive Richard Banks told Reuters. “We are now going through a period of evaluation.”

Chancellor George Osborne is keen to sell the government’s banking assets to recoup taxpayers’ money splashed out in a bailout of troubled lenders during the 2007-2009 financial crisis.

Under financial plans set out after the Conservatives were elected with a surprise majority in May, Osborne said last week the government would begin selling shares in Royal Bank of Scotland in coming months having already sold more than half its stake in Lloyds Banking Group.

Other banking assets are owned by UKAR and Reuters reported earlier in June, citing sources familiar with the matter, that a group including investment bank Goldman Sachs and U.S. buyout firm Blackstone had bid for Granite. RBS is also interested in the portfolio, sources said.

Banks said a shortlist of potential buyers would be in place by the end of July but warned that extended “due diligence” on both transactions would follow, making it unlikely either will complete in 2015.

“They are very complex transactions and it really depends on the due diligence and any legal hurdles that we face,” Banks said.

UKAR, Britain’s seventh-biggest provider of home loans, also said it had repaid 3.7 billion pounds to the government in the year through March 2015, bringing the total repaid to 14.1 billion of the 48.7 billion it owed.

Banks said he expected taxpayers to be fully repaid within 10 years.

UKAR reduced the size of its balance sheet by a further 8.8 billion during the period. That means assets worth 49.7 billion have been shed since UKAR’s formation from its 115.8 billion balance sheet in 2010.

UKAR made an underlying pretax profit of 1.4 billion pounds during the period, up 11 percent on the year before. The number of mortgages three or more months in arrears fell 23 percent to 11,976. –Reuters

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