Linklaters advises as UK Asset Resolution announces sale of Bradford & Bingley assets for £5.3 billion.

Following an open and competitive process, Bradford & Bingley plc (“B&B”), part of UK Asset Resolution Limited (“UKAR”), confirmed that it has agreed to sell two separate portfolios of buy-to-let and residential owner-occupied mortgages to an investor group led by Barclays Bank PLC for a total of £5.3 billion. Pursuant to the sale, the purchasers will acquire approximately 45,000 B&B and Mortgage Express mortgages.

Financial completion is expected within the next few weeks and will enable total loan repayments of £5.3 billion to HM Treasury in respect of the outstanding debt originally incurred by HMT in respect of the B&B assets (the “HMT Debt”). Since B&B was taken into public ownership in 2008, the cost of the HMT Debt has been funded by the UK’s leading financial institutions via their membership of the Financial Services Compensation Scheme (“FSCS”) through payment of an increased levy by FSCS members.

The purchasers’ acquisition of the mortgage portfolios is supported by a finance package in the form of a commitment to buy investment grade bonds backed by the mortgage portfolios which has been made available by a consortium of financial institutions made up of Barclays Bank UK PLC, HSBC, Lloyds, Nationwide, NatWest Bank and Santander UK (the “Consortium”). Following completion of the transaction and the repayment of the remaining HMT Debt, FSCS members (including the Consortium) will cease to bear the cost of the HMT Debt via the FSCS levy.

Linklaters advised the Consortium on the transaction with a team led by Structured Finance partner Adam Fogarty, and including counsel Will Trotman, and associates Helen Zhou and Gigi Hock.

Linklaters previously advised the financing consortium in relation to the sale by UKAR in 2017 of £11.8 billion of mortgage loans originated by Bradford and Bingley, and the subsequent public securitisation transactions backed by those mortgage loans. This was one of the largest ever government asset sales in Europe.