It has today been reported that the government has sold £13bn of former Northern Rock mortgages that tax payers acquired during the financial crisis.
UK Asset Resolution (UKAR) has sold the government’s portfolio to US investment firm Cerberus in what is thought to be the largest financial asset sale to date by a European government.
Cerberus has already been very active in the UK market and has previously acquired a significant portfolio of the government’s stake in Lloyds. As we have commented in our
Banking Report “Lifting the Lid off Lending”
berg has seen cases where businesses whose debts have been sold to Cerberus have been put under huge pressure and often forced into administration. Cerberus chose to be neither a “trusted
adviser” nor a “long term partner” to these businesses.
TSB Bank will buy £3.3m of the former Northern Rock mortgages and loans from Cerberus. It remains to be seen what will happen with the remainder of the loan and mortgage book purchased by Cerberus.
It is difficult to assess whether the sale of Northern Rock mortgages is a good deal for tax payers. However, it is clear that Cerberus continues to rapaciously acquire debt portfolios from the government
owned banks as well as National Bank of Australia (which includes Clydesdale and Yorkshire) and the National Assets Management Agency (NAMA – Ireland’s bad bank).