UPDATE 1-J.C. Flowers set to buy portion of Northern Rock loans - paper

Wed Jul 17, 2013 6:29pm EDT

July 17 (Reuters) - U.S. private equity company J.C. Flowers is in the final stages of negotiations to buy 450 million pounds ($682.8 million) of Northern Rock loans from the British government, the Times newspaper reported on Wednesday.

J.C. Flowers will pay 300 million pounds for the loans, which will be bought through its small regional lender, One Savings Bank, as part of a sale organised by UK Asset Resolution (UKAR). An announcement is likely within the next few days, the Times reported on its website.

J.C. Flowers' London office could not immediately be reached for comment outside regular business hours.

UKAR is a so-called zombie bank that does not take new business and is responsible for winding down the loans of the state-owned remnant of now-defunct lender Northern Rock Plc and Bradford & Bingley, both of which the government bailed out during the 2008 financial crisis.

After being nationalized, Northern Rock's business was split into two companies. A new standalone 'good' bank, Northern Rock Plc was sold to Richard Branson's Virgin Money, while the second company, Northern Rock Asset Management, is running down the book of bad mortgages that were left and remains in government hands.

"In line with our stated strategy of winding down the loan book, we will talk to parties interested in acquiring elements of the companies' loan books," a UKAR spokesman said.

"As you'd expect, such negotiations are confidential. We will only ever sell for a price that preserves taxpayer value."