UK Asset Resolution sells remaining Bradford & Bingley, NRAM assets for £5B

Bad bank UK Asset Resolution Ltd. agreed to sell the issued share capital of Bradford & Bingley PLC and NRAM Ltd. and their remaining mortgage and loan portfolios for total proceeds of about £5 billion.

The sale, which brings to a close the U.K. government's ownership of the two companies and returns them to private ownership, will be made to a consortium comprising U.S. hedge fund manager Davidson Kempner Capital Management LLC and Citigroup Inc., UK Asset Resolution said Feb. 26.

The government set up the bad bank in 2010 and lent it £48.7 billion to manage assets from two lenders that collapsed during the financial crisis, Bradford & Bingley and NRAM, which contains assets from the former Northern Rock. In 2018, UK Asset Resolution said it expects to complete the sale process for all the assets it collected after the 2008 financial crisis by 2021.

The transaction will complete in two stages — the sale of the loans to Citi and the sale of the companies to Davidson Kempner, according to the statement. The sale of the loans is expected to complete within the next few weeks, while the sale of the companies, subject to the receipt of regulatory approvals, is expected to take place in the summer.

Funds managed by Pacific Investment Management Co. LLC will finance the majority of the transaction, which involves a change in ownership of Bradford & Bingley and NRAM, according to the statement. Customers, however, will not be moving to a new lender and the terms and conditions of any loans will remain unchanged.

"This sale represents a major achievement. At last March's budget we promised to finally return B&B and NRAM to private ownership and we have done just that," said John Glen, economic secretary to the Treasury.

UK Asset Resolution, which will remain in government ownership, will be responsible for meeting ongoing contractual obligations to the consortium and managing other remaining liabilities, with the activity to be outsourced to PricewaterhouseCoopers LLP.