UK Asset Resolution (UKAR), has confirmed that it has agreed to sell two separate portfolios of residential owner-occupied mortgages and unsecured loans to Citi for a total of £4.9 billion. The majority of financing for the transaction is being provided by PIMCO.
Financial completion is expected within the next few weeks and will enable UKAR to repay all outstanding government loans to HM Treasury.
The sale is based on the portfolio position as at 30 September 2018, from which point the purchaser will acquire the risks and rewards of ownership of approximately 66,000 Northern Rock Asset Management (NRAM) loans.
In a company statement, UKLAR said “A key consideration in selecting the successful bidder was the continued fair treatment of customers. There will be no changes to the terms and conditions of the loans as a result of this transaction. Customers will receive the same protections for the lifetime of their mortgage as they do under UKAR’s ownership without affecting their ability to re-mortgage. The mortgages will continue to be administered by the same servicing company, providing continuity of service. Customers do not need to take any action, those included in the transaction will be contacted in due course to explain the change in ownership.”
Ian Hares, Chief Executive Officer, of UKAR said “This is a significant step in the reduction and simplification of our balance sheet. When complete, this sale will reduce UKAR’s balance sheet to £8bn, a 93% reduction since formation. Looking forward, we are now focussed on releasing the Government from its remaining investment in NRAM and Bradford & Bingley (B&B).”
Chancellor Philip Hammond said “Through our careful oversight of the country’s finances we are continuing to recover significant amounts of money that were loaned during the financial crash.”
“Today’s sale enables us to recover the full amount taxpayers loaned to Northern Rock and Bradford & Bingley, helping us pay down our debts and strengthen our finances for the future.”
The sale simplifies the book of assets held by UK Asset Resolution (UKAR), the holding company for NRAM and B&B, bringing the government closer to the final disposal of NRAM and B&B, as announced at Autumn Budget 2018.
B&B’s and NRAM’s closed loan books are managed by UKAR on behalf of the taxpayer. Following this transaction, UKAR now owns c. £8 billion worth of assets, down from c. £14 billion in September 2018 and from £116 billion in 2010.