Crisis-era ‘bad bank’ repays last of government loan

A branch of Northern Rock, which had many of its loans bought from it by 'bad bank' UK Asset Resolution during the financial crisis
A Northern Rock bank branch is pictured in London, on January 19, 2009. Britain unveiled a second bank rescue package worth tens of billions of pounds Monday, aimed at kick-starting lending to homeowners and businesses and curb an alarmingly deepening recession. Prime Minister Gordon Brown said the measures, including an insurance scheme to protect banks from so-called toxic assets, were crucial to free up credit to get the economy moving again. AFP PHOTO/Leon Neal (Photo credit should read Leon Neal/AFP/Getty Images)

The so-called bad bank created to take on the debts of Northern Rock and Bradford & Bingley (B&B) after the financial crisis has paid back the last of the almost £50bn used to fund the bailouts.

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Treasury-owned UK Asset Resolution (UKAR) today said it had repaid in full the government loan of £48.7bn which it had mainly used to buy up bad loans from now-defunct Northern Rock and B&B.

UKAR was created in 2010 to help wind up the imperilled lenders in an orderly way. It took on billions of pounds worth of mortgage loans that borrowers could not afford to pay back as house prices fell.

Ian Hares, chief executive of UKAR, said: “The final payment followed the completion of the sale of the two NRAM [formerly Northern Rock] portfolios.”

“I am delighted that, in under ten years, we have been able to repay in full the government loan,” he said.

Between formation in October 2010 and 31 March this year, the UKAR balance sheet was reduced by £104.4bn, reflecting £37.4bn of asset sales and £43.5bn of customer loan repayments.

Hares said: “Looking forward, we are focused on the disposal of the remaining government investments in NRAM and B&B.”