2 Min Read
* 1 percent rise could push 22,000 into arrears -CEO
* Expects to sell parts of mortgage portfolio this year (Adds further details, comments from CEO on asset sales)
By Matt Scuffham
LONDON, June 3 (Reuters) - The boss of Britain's "bad bank" warned rising interest rates could push thousands of its customers into arrears, potentially making it harder for taxpayers to get their money back.
UK Asset Resolution (UKAR), which is winding down the loans of Northern Rock and Bradford & Bingley, said on Tuesday it repaid 6.2 million pounds to the government in the 15 months to end March, meaning it has so far paid back 10.4 billion pounds of the 48.7 billion that it owes.
Chief Executive Richard Banks said UKAR had benefited from interest rates staying at record lows and a pick-up in Britain's economy. However, he expects rates to rise around the end of 2014, making repayments harder for borrowers.
"We anticipate that if there was an interest rate rise of 1 percent, another 22,000 customers could go into arrears. Small and often over a long period would be better than sudden, very large increases," Banks told Reuters in an interview.
Banks said UKAR has reduced arrears by working with customers in financial difficulty. It 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.
Mortgage arrears among UKAR's customers fell by 39 percent to 15,500 in the 15 months to end March. It made an underlying pretax profit of 1.26 billion pounds in the year to end March, up 186 million on the year before.
Banks said he expected UKAR to sell parts of its mortgage book in the next few months having received approaches from potential buyers.
"There are good opportunities to sell good-performing assets at full price," he said. (Editing by Chris Vellacott)