UK Asset Resolution announces sale of Bradford & Bingley assets for £11.8 billion
31 Mar 2017
Bradford & Bingley plc (B&B), part of UK Asset Resolution (UKAR), today confirms that following an open and competitive process it has agreed to sell two separate asset portfolios comprising performing buy to let loans for a total of £11.8bn to Prudential plc and to funds managed by Blackstone.
Financial completion is expected within the next few weeks and will enable total loan repayments to HM Treasury of £11.8bn including £10.9bn of the £15.65bn Financial Services Compensation Scheme (FSCS) loan. 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. The fair value of the B&B loan book is less than its book value, reflecting the low interest rates payable on the loans.
A key consideration for this sale was the continued fair treatment of borrowers and there will be no changes to the terms and conditions of the buy to let loans involved in this transaction. Borrowers do not need to take any action at this time and all those impacted will be contacted in due course to explain the change in ownership.
Subject to market conditions and taxpayer value, and in order to repay the remainder of the FSCS loan in full by March 2018, we expect to launch the next phase of the programme of sales later this year.
Ian Hares, Chief Executive Officer, commented:
“This sale of assets is a significant milestone in the phased repayment of the FSCS loan extended to Bradford & Bingley and when complete will reduce UKAR’s balance sheet to £22bn from £116bn in 2010 when it was formed. We are very pleased with the price achieved which delivers excellent value for the taxpayer. 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.”
Notes to Editors
- The sale is based on the portfolio position as at 30 September 2016, from which point the buyers will acquire the risks and rewards of ownership of 104,000 loans originated by Bradford & Bingley and Mortgage Express.
- A finance package has been underwritten for the purchasers by a consortium made up of Barclays, HSBC, Lloyds, Nationwide, RBS and Santander UK.
- When B&B was taken into public ownership in 2008 its customer deposit book was transferred to Santander UK and replaced by loans from HMT Treasury and the FSCS. In turn the FSCS borrowed £15.65bn from HM Treasury to fund its loan to B&B.
- These mortgages will continue to be serviced for an interim period of up to 12 months by Computershare Mortgage Services, an FCA regulated company, operating under the trading name of Computershare Loan Services (CLS). Separately, the buyers have agreed that CLS will continue to service the customer loans following the interim period.
- Credit Suisse International acted as financial advisor to UKAR in this process
UK Asset Resolution Limited (UKAR)
UKAR, the holding company for Bradford & Bingley plc (B&B) and NRAM Limited (NRAM), was established on 1 October 2010 to facilitate the orderly management of the closed mortgage books of both B&B and NRAM to maximise value for taxpayers, while ensuring that both companies continue to treat customers fairly, deliver consistently high levels of service and support those customers facing financial difficulty. Further information about UKAR is available at www.ukar.co.uk.
Blackstone is one of the world’s leading investment firms. We seek to create positive economic impact and long-term value for our investors, the companies in which we invest and the communities in which we work. We do this by using extraordinary people and flexible capital to help companies solve problems. Our asset management businesses, with over $360 billion in assets under management, include investment vehicles focused on private equity, real estate, public debt and equity, non-investment grade credit, real assets and secondary funds, all on a global basis. Further information is available at www.blackstone.com. Follow Blackstone on Twitter @blackstone
Andrew Dowler, Managing Director
Tel: +44 20 7451 4275
Prudential plc and its affiliated companies constitute one of the world's leading financial services groups, serving around 24 million insurance customers and it has £599 billion of assets under management (as at 31 December 2016). Prudential plc is incorporated in England and Wales and is listed on the stock exchanges in London, Hong Kong, Singapore and New York. Prudential plc is not affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States of America.
Jonathan Oliver, Director of Communications
Tel: +44 7740 096018
Credit Suisse International
Credit Suisse International (“Credit Suisse”), which is authorised by the PRA and regulated by the FCA and the PRA in the United Kingdom, is acting as financial adviser exclusively for UKAR and no one else in connection with the matters set out in this Announcement and will not be responsible to any person other than UKAR for providing the protections afforded to clients of Credit Suisse International, nor for providing advice in relation to the transaction described in this announcement, the content of this Announcement or any matter referred to herein. Neither Credit Suisse International nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Credit Suisse International in connection with this Announcement, any statement contained herein or otherwise. Further information about Credit Suisse can be found at www.credit-suisse.com.
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