The Government have reached an agreement to sell off £11.8 billion of its Bradford & Bingley mortgage loans to insurance business Prudential (LON:PRU) and U.S private equity firm Blackstone (NYSE:BX).
After what the Treasury described as a “highly competitive process”, Prudential and Blackstone secured the mortgages. The loans are currently being managed by the UK Asset Resolution (UKAR), which also manages Northern Rock on the behalf of the Government.
UKAR was initially set up in 2010 by the government, as a body to manage the two nationalised banks and its mortgage loan portfolio.
The UK Government had initially acquired the loans in the throws of the 2008 financial crisis. The treasury has since been steadily off-loading those assets in a bid to raise back tax-payer funds.
Chancellor Philip Hammond commented: “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.”
Ian Hares, UKAR chief executive, said: “This sale of assets is a significant milestone… The transaction delivers against our overarching objective to develop and execute divestment strategies which protect and maximise value for the taxpayer whilst treating customers fairly.”
Alongside selling off its Bradford & Bingley assets, the treasury has also been actively reducing its stake in Lloyds (LON:LLOY) and The Royal Bank of Scotland (LON:RBS), which it also acquired during the height of the global economic downturn. As of currently, RBS is still majority owned by the government, with a share of 73 percent. Conversely, its share of Lloyds has considerably lessened to a stake of just under 5 percent.
The sale is expected to be completed within the next year subject to market conditions, the Government confirmed.
This comes amid the historic triggering of Article 50 by Theresa May’s government on Wednesday, following months of speculation. This has formally commenced the UK’s exit negotiations with the now 27-member bloc of the European Union.
Read coverage of the Chancellor’s latest budget here.