Government sells last stakes in Bradford & Bingley and Northern Rock

Northern Rock customers queue outside a branch
Northern Rock customers queue outside a branch (PA Archive)
14:46pm, Fri 26 Feb 2021
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The Government has sold the last remnants of its stake in Bradford & Bingley and NRAM, the firm formerly called Northern Rock, which were nationalised during the financial crisis more than a decade ago.

Treasury officials negotiated the £5 billion sale of the two entities and their remaining loans to a consortium comprising Davidson Kempner Capital Management and Citibank.

The deal marks the end of a years-long effort to slowly dispose of the assets the Government bought when bailing out banks following the 2007-2008 crash.

“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, the economic secretary to the Treasury.

“We are continuing to protect consumers while recovering significant amounts of the taxpayer money used to ensure financial stability during the financial crisis.”

At last March’s budget, we promised to finally return B&B and NRAM to private ownership and we have done just that

Since 2010 the two companies have been part of UK Asset Resolution (UKAR), a holding company for their mortgage books.

Customers will continue to pay back their mortgages on the same terms as before, the Government said.

UKAR chief executive Ian Hares said: “UKAR’s objective is to facilitate the orderly wind-down of NRAM and B&B whilst treating customers fairly.

“This transaction marks the end of the Government’s ownership of these companies and is a significant step towards the completion of that objective and I would like to thank all those who have been involved over the 10 years since we were formed.”

The two banks were bailed out by the Government amid the financial crisis, as they were deemed too important to go bust.

Queues unconvinced by Northern Rock guarantee (PA Archive)

Pictures of customers queuing outside Northern Rock branches to withdraw their savings during the subprime mortgage crisis in 2007 were among the starkest visualisations of the crisis in the UK.

In just one day after Northern Rock revealed it was having problems, savers were estimated to have withdrawn around £1 in every £20 that was in the bank’s retail deposits, a total of around £1 billion.

As cash continued to flow out the door, then-chancellor Alistair Darling days later promised the Government would guarantee all deposits in the bank.

The board of Northern Rock tried to find a buyer who would take over the bank, however no bidder would give sufficient guarantees that they would pay back the billions owed to the Government. Instead, the Treasury took over.

After nationalisation, Northern Rock was split into two parts, the “good bank”, which was eventually bought by Virgin Money, and the “bad bank” called NRAM, full of risky loans.

The Government has been selling off assets that it bought during the crisis for years. This is the last of many sales by UKAR.

In 2017 it sold off the last shares it owned in Lloyds after taking a 43% stake at its peak. It still owns 62% of NatWest Group, formerly known as the Royal Bank of Scotland.

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