In Brief

Government to restart £16bn Bradford & Bingley sale

Treasury tells UK Asset Resolution to proceed with first phase, in 'further sign of renewed confidence in economy'

Another chapter in the UK banking crisis could soon be closed, after the government confirmed it has given the green light for a sale of £16bn worth of Bradford & Bingley mortgages.

Plans to offload the loan book were originally announced by former chancellor George Osborne at the Budget in March, The Times says. The process was put on hold in the summer amid turmoil on markets.

Now the Treasury has told UK Asset Resolution, the government agency that manages "bad bank" loans, including those related to Northern Rock, to proceed with the first phase of the disposal.  

The Times says the decision amounts to "a further sign of renewed confidence in the economy", which is showing surprising resilience in the wake of the Brexit vote.

Bradford & Bingley expanded rapidly through heavy lending to buy-to-let landlords and failed at the height of the financial crisis in 2008. Its branches and deposits were acquired by Spanish bank Santander, while its loans were nationalised.

At that time, 14,326 of the mortgages were "in arrears or repossession". That number has fallen to 2,803.

The sale is expected to take place over a series of transactions. The original timetable provided for the process to be completed by the end of the 2017/2018 financial year.

Proceeds from the sale would allow the Treasury to repay a £15.65bn loan taken out by the Financial Services Compensation Scheme (FSCS) to bail out Bradford & Bingley eight years ago.

As the FSCS is funded by the industry, Britain's high street banks have effectively been servicing those loans and are thought to have paid out as much as £2bn in interest since 2010.

"They will be motivated, therefore, to get involved in the sale, most likely by providing debt funding to buyers," says the Times.

The sale would mark the largest ever asset disposal by a European government. The UK holds the current record, for the £13bn Northern Rock loan portfolio it offloaded last year to US equity firm Cerberus and TSB.

Recommended

Scotland’s ongoing ferry fiasco: what you need to know
The unfinished Glen Sannox ferry
In Depth

Scotland’s ongoing ferry fiasco: what you need to know

How a trade war with Europe might play out
Liz Truss
Between the lines

How a trade war with Europe might play out

Is Russia’s economy bouncing back?
Vladimir Putin and Defence Minister Sergei Shoigu attend the Victory Day parade in Red Square
The latest on . . .

Is Russia’s economy bouncing back?

Will the energy war hurt Europe more than Russia?
Ursula von der Leyen
In Brief

Will the energy war hurt Europe more than Russia?

Popular articles

Is Vladimir Putin seriously ill?
Vladimir Putin
Why we’re talking about . . .

Is Vladimir Putin seriously ill?

The mysterious Russian oligarch deaths
Vladimir Putin has previously deployed ‘extreme measures’ to crush opposition
Why we’re talking about . . .

The mysterious Russian oligarch deaths

Nato vs. Russia: who would win?
Nato troops
In Depth

Nato vs. Russia: who would win?

The Week Footer Banner