UK 'bad bank' aims to sell remaining crisis-era loans by 2021

FILE PHOTO: Rain clouds pass over Canary Wharf financial financial district in London, Britain July 1, 2016. REUTERS/Reinhard Krause/File Photo

LONDON (Reuters) - The “bad bank” set up by Britain to manage more than 100 billion pounds ($132 billion) of assets from two lenders that collapsed during the financial crisis expects to have sold off its remaining loans by 2021.

UK Asset Resolution (UKAR), owned by Britain’s Treasury, said on Tuesday it had 11.9 billion pounds of customer loans still on its balance sheet, which has reduced by more than 96 billion pounds since 2010.

The assets consist mainly of loans from mortgage lender Bradford & Bingley and bank Northern Rock.

The sale of the remaining assets within the planned time frame will depend on “supportive market conditions”, UKAR added.

UKAR Chief Executive Ian Hares said it was hard to say what could derail a sale, adding markets had remained more resilient than expected throughout upsets like the Brexit vote.

“All we can do is crack on, stick to the fact we have to satisfy ourselves and the shareholder that anything we do represents value for money for the taxpayer and if it doesn’t we have the option of revisiting the plans,” he told Reuters by phone.

Once UKAR has completed its sales, it will mark the winding down of another crisis-era intervention made by the government to stabilize Britain's banking sector, with its stake in Lloyds Banking Group LLOY.L already sold and the re-privatization of the Royal Bank of Scotland RBS.L underway again.

UKAR said it expected to sell 900 million pounds worth of equity release mortgages by the end of this year, and also needed to consider “inherent complexities” in the Northern Rock and Bradford & Bingley portfolios, including non-loan business assets and liabilities and ongoing obligations like pensions.

“Inevitably there needs to be a home within the public sector to look after all the things that are left,” Hares said, adding that this could mean UKAR will remain open, although at a fraction of the size it is today.

Reporting by Emma Rumney, Editing by Sinead Cruise and Mark Potter