UK ‘bad bank’ set to complete asset sell-off by 2021
UK Asset Resolution has shrunk its balance sheet by 83%, or £96 billion, so far and repaid 79% of taxpayer cash.
Britain’s “bad bank” has said it is aiming to complete the wind down of mortgage books of failed lenders Northern Rock and Bradford & Bingley within three years.
UK Asset Resolution (UKAR) – set up in 2010 to manage the failed bank assets after the financial crisis – said it was “probable” it could complete the sell-down by 2021 in what would mark another milestone in the sector’s recovery since the credit crunch meltdown.
It has been working with advisers on how to offload its remaining assets, which has so far been shrunk by 83% or £96 billion.
UKAR said it had cut the balance sheet by another £14.5 billion to £17.2 billion in the year to March 31.
Subject to the continuation of supportive market conditions, we believe that it is probable that the process can be completed by 2021 UK Asset Resolution
But with another £5 billion sell-off announced in April and the sale of another £900 million of equity release mortgages, which is expected to complete later this year, its customer balances is expected to fall below £11 billion.
UKAR said: “As always, we will need to satisfy ourselves, UK Government Investments and HM Treasury that whatever option we choose represents value for money for the taxpayer but, subject to the continuation of supportive market conditions, we believe that it is probable that the process can be completed by 2021.”
It comes after the Government restarted the process of selling down its stake in Royal Bank of Scotland less than a month ago, while Lloyds Banking Group was fully returned to private hands last year.
Ian Hares, chief executive of UKAR, said: “I am pleased that we have continued to make good progress in achieving our objective, with high levels of service delivered for our customers and an 83% reduction in our balance sheet since formation in 2010.”
UKAR reported a 17% fall in annual underlying pre-tax profits to £583.9 million as a result of efforts to reduce its mortgage balance sheet.
It borrowed £48.7 billion of taxpayer cash to take on the loans of Northern Rock and Bradford & Bingley, but has so far paid £38.4 billion back to the Government, representing 79%.
It said £14.7 billion of this was paid back in the last financial year.
On arrears levels, UKAR said mortgage accounts three or more months in arrears, including possessions, had fallen by 22% over the year.