A new company to unite Bradford & Bingley's mortgages with the "bad bank" of Northern Rock was created today in a move that is intended to help the taxpayer recoup more of its money from the nationalised banks.
The new holding company will be called UK Asset Resolution (UKAR) and could one day be sold off alongside the "good" part of Northern Rock, which has begun selling new mortgages again.
Bradford & Bingley was nationalised in 2008, but its savings books were sold to Santander. Northern Rock, also taken over the government that year, was split into a "good" and "bad" bank last year, the "bad" part holding its toxic assets being named Northern Rock Asset Management (NRAM).
NRAM today said it had repaid £1bn of the £24bn taxpayer loan so far this year, up from the £300m it announced in August for the first six months of the year.
Gary Hoffman, Northern Rock's chief executive, will now step down from holding a role at the "bad bank" of the Newcastle-based lender. He said todaythat impairment charges had reduced and arrears stabilised.
"This integrated structure, with NRAM and Bradford & Bingley under common management and governance, creates the opportunity to deliver maximum value for the taxpayer and is therefore the right strategy. I wish the new board well for the future," Hoffman said.
He disputes the description of NRAM as a "bad bank" as it returned to profitability in the first half while the "good bank" which offers new mortgages continues to make losses. Hoffman continues to be chief executive of Northern Rock plc, the "good" part of the lender.
UK Financial Investments, which owns the taxpayers' stakes in the bailed out banks, said the new structure would help to increase returns to taxpayers.
Keith Morgan, head of wholly owned Investments at UKFI, said "NRAM and B&B have been making good progress under public ownership. UKAR's establishment today brings NRAM and B&B closer together. Integrating the businesses under a common governance and management structure is an important step which will help maximise value for the taxpayer."
The new UKAR will be chaired by Richard Pym with Richard Banks as chief executive.
http://www.guardian.co.uk/business/2010 ... thern-rock
