Chancellor Philip Hammond said the government will sell £11.8bn worth of Bradford & Bingley loans it bought when it bailed out the lender during the 2018 financial crisis.
Hammond said insurance giant Prudential plc (LON:PRU) and investment firm Blackstone (NYSE:BX) would buy the lender’s buy-to-let mortgages.
The deal is one of the biggest asset sales by a European government and the Chancellor said it would deliver value for money to the taxpayer. He said the price achieved reflected the “strong credit quality” of the portfolio and the outcome of a “highly competitive sale process”.
“The sale of these Bradford & Bingley assets for £11.8bn marks another major milestone in our plan to get taxpayers’ money back following the financial crisis,” Hammond said.
“We are determined to return the financial assets we own to the private sector and today’s sale is further proof of the confidence investors have in the UK economy.”
UK Asset Resolution (UKAR), which has been handling the sale, said that terms and conditions for customers will not change.
Following completion of the deal, UKAR’s balance sheet will reduce to £22bn from £37bn in September 2016.
“The transaction delivers against our overarching objective to develop and execute divestment strategies, which protect and maximise value for the taxpayer whilst treating customers fairly,” said UKAR chief executive Ian Hares.
The sale is expected to be completed by the end of fiscal year 2017/18.
Earlier this month, the government reduced the taxpayers' shareholding in Lloyds Banking Group (LON:LLOY) to 2.95%.
UK Financial Investments, which manages the government's stakes in bailed-out lenders, reduced the stake to 2.104bn shares from around 2.776bn shares held when it last disposed of a tranche at the end of February, which was a day after the bank’s strongest results in over a decade.
UKFI resumed the sale of shares in Lloyds last October, having halted them almost a year earlier because of stock market turbulence.
However, the government’s plans to sell a further stake in Royal Bank of Scotland Group plc (LON:RBS) are still on hold as the bank tackles legacy issues.
Royal Bank of Scotland last month reported a staggering 2016 loss of £6.95bn, compared to a loss of £1.97bn in 2015, reflecting litigation and restructuring costs.