United Kingdom financial services
Prudential and Blackstone to buy UK bank loans for US$14.8bn
April 3rd 2017 | United Kingdom | Asset management | Blackstone
On March 31st the UK Treasury announced the sale of crisis-era loans owned by Bradford & Bingley Plc (B&B), a failed mortgage provider, to Prudential Plc and Blackstone Group LP for £11.8bn (US$14.8bn). The portfolio of buy-to-let mortgages was acquired by the UK Asset Resolution (UKAR), a rescue fund, following B&B's government bailout in 2008.
The sale will reduce the UKAR's balance sheet to £22bn. The deal has reportedly been underwritten by a group of UK banks, who are willing to provide up to £12.5bn in financing to help Prudential and Blackstone complete the purchase.
B&B's mortgage portfolio is being sold at a discount to its fair value, reported to be in the range of £400m, owing to the low rates of interest being paid on the constituent loans. Once the deal is completed, the government will have recovered over £18bn from B&B, roughly two-thirds of the amount it stumped up for the bailout.
The sale is part of the Treasury's plan to return taxpayer funds to government coffers. It is also reportedly preparing for a sale of its remaining 3% stake in Lloyds Banking Group Plc within the next few months.
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