Largest ever sale of financial assets by a government in Europe
In November 2015 UK Financial Investments Limited (UKFI), working with UK Asset Resolution Limited (UKAR) and HM Treasury, successfully completed the sale of £13.3 billion former Northern Rock mortgages, acquired during the financial crisis.
Following a highly competitive bidding process, UKAR agreed a sale to a consortium led by US private equity group, Cerberus. The sale comprised of £11.9 billion of mortgages from the Granite securitisation vehicle within Northern Rock Asset Management (NRAM) and additional linked loans (£1.4 billion). Some 270,000 mortgages and loans were sold in the deal. The taxpayer received £5.5 billion in cash while Cerberus took on nearly £8 billion of existing liabilities from UKAR with total proceeds implying a c. £280m premium to book value.
The NAO reviewed the transaction and concluded that “This was an extremely large and complex transaction that was professionally executed within a tight timeframe… in the context of the overall objective of swiftly reducing the balance sheet, the sale achieved value for money.”