GLOBAL investors yesterday snapped up £2.7bn of Northern Rock and Bradford and Bingley (B&B), in Europe’s biggest retail mortgage-backed security (MRBS) deal for three years.
JP Morgan and Commercial First arranged the deal with UK Asset Resolution (Ukar), the unit responsible for the assets of the so-called bad bank parts of the collapsed lenders.
The portfolio is comprised of 27,000 residential mortgage loans, with £1.7bn of the sale made up of Northern Rock loans and £1bn from B&B. The US investment bank paid a premium of around £55m above the book value of the loans, and mortgage servicing firm Pepper will inform the borrowers. Initially the deal was expected to come in at £1.6bn.
But investor demand was stronger than anticipated, leading to the £2.7bn sale.
Ukar has previously sold portfolios of loans to Virgin Money – which took the so-called good bank part of Northern Rock – and One Savings Bank.
The unit now has a mortgage book totalling roughly £56.6bn.
Despite the sales of assets to other banks, the majority of progress in cutting down the portfolio has come from loans maturing naturally since 2008.