UK’s bad bank pays Treasury another £4bn

City A.M. Reporter
UK ASSET Resolution paid the government £4bn in 2012, the bad bank reported yesterday, as it runs down the loan books of Northern Rock and Bradford and Bingley.

It still owes the state £43.4bn and expects it to be repaid over the coming decade.

Chief executive Richard Banks said he was confident taxpayers would get back all the money the government spent on rescuing the failed lenders during the 2008 financial crisis.

“It always depends on economic factors such as unemployment, interest rates and the general state of the economy,” he said.

Banks, who expects interest rates to stay at record-low levels in 2013, said there is potential for more customers to start getting into financial difficulties when interest rates eventually start rising again.

UKAR works with customers who have fallen behind on their mortgages to come up with repayment plans to prevent them having their homes repossessed and ensure the government eventually gets its money back.

The bad bank made an underlying profit of £1.36bn, up 25 per cent on the year before taking into account increased interest payments to the Treasury. The higher rate of interest reduced its overall profit by £260m.