Bloomberg News

UKAR Nationalized Banks Paid U.K. Government 2.15 Billion Pounds

March 02, 2012

UK Asset Resolution Ltd., which owns the U.K.’s fully nationalized banks, said it repaid 2.15 billion pounds ($3.4 billion) of the debt it owes the British government in 2011.

Profit before tax, excluding gains on the repurchase of the lender’s own debt, rose to 1.09 billion pounds from 444 million pounds on lower impairment charges for bad loans, UKAR said in a statement today. Bradford & Bingley Plc’s pretax profit climbed 18 percent to 299.2 million pounds, while Northern Rock (Asset Management) Plc had pretax profit of 789.9 million pounds, up from 191.3 million pounds.

“The low interest-rate environment does help tremendously, but also we have put a huge amount of effort into arrears management,” Chief Executive Officer Richard Banks said in a telephone interview today. “We have spent a lot of time working with non-fee-charging debt advisors and pointing customers in their direction.”

UKAR is seeking to repay 46.6 billion pounds to the British taxpayer and plans to run off or sell the majority of its customer loans. It was formed in 2010, holding mortgages from Bradford & Bingley and Northern Rock after they were taken over by the state and providing a single management structure.

Impairment charges declined to 390.4 million pounds from 1.09 billion pounds.

The lender bought back at a discount some of the debt its two banks issued before being nationalized. The lender has made a number of tenders since then at an average of 46 percent of face value, Finance Director Phillip McLelland said by phone. Gains on these purchases fell 60 percent to 338.1 million pounds.

UKAR said in December it will close one of its three sites as it reduces the number of mortgages it manages. Some of the 700 jobs at the site in Gosforth, north-eastern England, will be lost, though “the majority” of the workers will be asked to work at other sites, UKAR said.

Northern Rock Plc separated from Northern Rock (Asset Management) in 2010 and was bought by Richard Branson’s Virgin Money Holdings U.K. Ltd. in November for 747 million pounds.

To contact the reporter on this story: Howard Mustoe in London at hmustoe@bloomberg.net.

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


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