UK government sells GBP13bn of Northern Rock mortgages

The UK government has sold £13bn of Northern Rock mortgages to US private equity firm Cerberus Capital Management.

The assets will be sold by holding company UK Asset Resolution, the so-called ‘bad bank’ created in 2010 that also took over Bradford & Bingley’s loans.

The Treasury said this was the biggest-ever financial asset sale by a European government and it’s expected to generate £280m more than the book value of the loans.

Proceeds from the sale will be used to pay down the national debt.

Chancellor George Osborne said: “The sale, which raises £13bn for the British taxpayer, is the largest ever sale of financial assets by a British government, and we are now clear that taxpayers will get back more money from Northern Rock than they were forced to put in during the financial crisis.

“The highly competitive process, unprecedented scale, and the fact that these mortgages have been sold for almost £300m more than their book value demonstrates the confidence investors have in the UK, which has only been made possible by the success of our long-term plan.”

The Treasury said there would be no changes to the terms and conditions of the mortgages sold and customers do not need to take any action.