Government offloads assets

US firm buys £13bn of Northern Rock ‘bad loans’

Northern RockThe government has sold £13 billion of former Northern Rock mortgages which it bought during the meltdown of the banks.

US private equity firm Cerberus Capital Management has acquired the assets from  UK Asset Resolution (UKAR), the “bad bank” that was set up in 2010 to manage the loans made by Northern Rock and Bradford & Bingley.

Cerberus will sell to £3.3bn of the mortgages and loans loans to TSB, now part of Spanish bank Sabadell, which will take on 34,000 UK homeowners.

It is understood that the price paid is £280m above their book value and the deal means the Treasury has now sold more than 85% of the assets of Northern Rock, whose failure in 2007 precipitate the crash.

Queues formed outside banks as customers panicked over the safety of their savings.

Chancellor George Osborne said: “We are now clear that taxpayers will get back more money from Northern Rock than they were forced to put in during the financial crisis.

“The highly competitive process, unprecedented scale, and the fact that these mortgages have been sold for almost £300m more than their book value demonstrates the confidence investors have in the UK.

“Today marks another major milestone n clearing up the mess left by the financial crisis.”

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