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Prudential Plc, Blackstone to snap up Bradford & Bingley loans for £11.8B

U.K. Chancellor Philip Hammond authorized the sale of Bradford & Bingley Plc loans to Prudential Plc and funds managed by Blackstone Group LP for £11.8 billion.

The fair value of the loan book is less than its book value, the Treasury said March 31, reflecting the low interest rates payable on the loans. The transaction is the first part of a sales program designed to raise sufficient proceeds for B&B to repay a £15.65 billion debt to the U.K. Financial Services Compensation Scheme and the corresponding loan from the Treasury.

UK Asset Resolution Ltd. — which manages the closed loan books of B&B and NRAM, the former Northern Rock mortgage business, on behalf of the British taxpayer will see its balance sheet decline to £22 billion as a result of the transaction. The balance sheet stood at £37 billion in September 2016 and £116 billion in 2010.

The program of sales is expected to conclude before the end of 2017-2018. The Treasury noted that any further sales will be subject to market conditions.