* Sale to reduce UKAR's balance sheet to 22 bln stg
* Biggest UKAR asset sale since Northern Rock
(Adds UKAR CEO, context)
By Rachel Armstrong and Dasha Afanasieva
LONDON, March 31 Britain has sold a portfolio of
mortgages issued by failed lender Bradford & Bingley for 11.8
billion pounds to insurer Prudential and buyout firm
Blackstone in one of the biggest deals of its kind.
The British government forecast this month that it will make
a 23.5 billion pound loss on the cost of bailing out the
country's failed banks at the height of the financial crisis.
It spent more than 136.6 billion pounds ($170
billion)rescuing some of Britain's biggest high street lenders,
including Royal Bank of Scotland and Lloyds Banking
Group, but has so far only managed to recoup half of
Bradford & Bingley (B&B), a mortgage provider which was also
bailed out during the financial crisis, is owned by British
government vehicle UK Asset Resolution (UKAR).
"The price achieved is at the upper end of expectations,
delivers value for the taxpayer and compares favourably with the
‘fair value’ of the B&B loan book disclosed in B&B’s accounts
last year," UKAR said in a statement on Friday.
UKAR Chief Executive Ian Hares, who declined to say how many
bidders were involved, said the loans had a carrying value of
12.2 billion pounds resulting in an accounting loss for the
state run 'bad bank'.
The sale is one of the biggest asset sales by a government
in Europe, Hares said, but is smaller than the 13 billion pound
sale of Northern Rock mortgages in 2015.
It will reduce UKAR's balance sheet to 22 billion pounds,
which is about a 50-50 mix of residential and buy-to-let
mortgages. It stood at 37 billion pounds in September 2016 and
116 billion pounds in 2010 when it was formed.
UKAR said in 2016 it would sell Bradford & Bingley's 15.65
billion pound mortgage portfolio, which also includes around 3
billion pounds in non-performing loans, in two or three
tranches, as it seeks to recoup taxpayers' money.
On Friday it said it expects to launch the next phase of
sales later this year, although Hares said there was no target
date for the disposal of the remaining assets.
UKAR, which was advised by Credit Suisse, said there would
be no changes to the terms and conditions of the buy-to-let
loans involved in the transaction.
($1 = 0.8027 pounds)
(Additional reporting by Andrew MacAskill; Editing by Susan
Fenton and Alexander Smith)