LONDON: The “bad bank” set up to manage toxic assets rescued during the financial crash continues to defy that description with a £3.7bn payment to the Treasury.
UK Asset Resolution Limited, which was set up to manage assets from Northern Rock and Bradford & Bingley, made the Government loan repayments during the last financial year, it was announced yesterday.
Results for the 12 months ended March 31, 2015, also show the Sunderland-based organisation reduced its balance sheet by £8.8bn during the period, taking it to £49.7bn – down almost 43% from 2010 when UKAR was formed.
Meanwhile, underlying profit before tax rose 11% year-on-year to £1.4bn.
A unique UK business, UKAR, which employs around 1,000 people at Doxford Park and also has an office in West Yorkshire, was born out the credit crisis, following the nationalisation of the legacy banks of Northern Rock and Bradford & Bingley.
It describes its mission as being to maximise value for the taxpayer while serving its customers well and treating stakeholders fairly.
Since its establishment, Government loan repayments of £14.1bn – almost 30% of the total – have been made, while customer numbers have continued to fall, dropping from 467,000 in 2013/14 to around 389,000.
In the period covered by the latest results, the taxpayer also benefitted from other cashflows generated for the Government, including interest, taxes and guarantee fees totalling £0.7bn.
A portfolio of performing mortgages was likewise sold for £2.7bn at a premium of around £55m over book value.
In light of such successes, positive market conditions and healthy investor interest, the business has now begun seeking expressions of interest in respect of two more major transactions – the sale of mortgage assets worth around £13bn and the sale or outsourcing of its mortgage servicing operations.
“A lot of effort is going into these two projects,” said UKAR chief executive Richard Banks.
If we manage to sell what is effectively Northern Rock’s Granite portfolio, that is a reduction of £13bn of assets, which represents a big change.”
In total, UKAR customers currently hold around 445,000 mortgage accounts and 106,000 personal loan accounts, the majority of which continue to perform well, with more than 94% of customers being up-to-date with their monthly payments.
The number of mortgage accounts three of more months in arrears, including those in possession, reduced by 23% in the last financial year to 11,976 as at March 31.
UKAR continues to contact those who are struggling to keep up with payments, helping them find solutions to manage their mortgages, and viewing repossession as a last resort.
Mr Banks said: “Over the past four-and-a-half years we have achieved excellent results, reducing the balance sheet by nearly £50bn and overseeing a 70% fall in the number of mortgage accounts three or more months in arrears.
To build on our success we are now progressing two ambitious divestment projects which, if successful, will accelerate repayment of the government loans and ensure the stability of service to customers.”
