Project Chester

On 2 April 2019, UK Asset Resolution Limited (UKAR) confirmed that it had agreed the sale of two separate portfolios of residential owner-occupied mortgages and unsecured loans for a total of £4.9 billion. Citi was the purchaser, with the majority of financing for the transaction provided by PIMCO.

UKGI provided a combination of corporate finance and civil service expertise to help achieve an open and competitive process that delivered value for money for the UK taxpayer, whilst also managing wider issues that represented a risk to the sale process and government.

One such issue was the continued fair treatment of customers, a key consideration in selecting the successful bidder. UKGI, working with UKAR and HM Treasury, engaged with the Financial Conduct Authority (FCA) to agree a package of customer protections that bidders were required to adhere to before their bids would be considered. Stipulations of the package ensured that customers would retain the current terms and conditions of their loans following the transaction, as well as retaining the same protections for the lifetime of the mortgages as under UKAR ownership without affecting their ability to re-mortgage.

As a result, the sale achieved UKGI and HM Treasury’s objectives of selling the portfolios at a competitive price, while also ensuring customers holding the loans were protected.

The £4.9 billion raised from the sale was used to fully repay the loans provided by the Treasury to NRAM and Bradford & Bingley plc (B&B) during the financial crisis and reduce public debt.