Rothesay Life buys £860m of UK ‘bad bank’ mortgage loans

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Insurance giant Rothesay Life has bought an £860m equity release portfolio from the UK government's "bad bank", which was set up following the financial crisis.

The portfolio was sold by UK Asset Resolution (Ukar), a holding company for the closed mortgage books of failed lenders Northern Rock, Bradford & Bingley and Mortgage Express.

Proceeds of the sale will be used to pay down the national debt, the Treasury said, although the amount will be less than the proceeds. The figure will be revealed to parliament in the next few weeks.

Ukar chief executive officer Ian Hares said: "This is another step in the reduction and simplification of our balance sheet.

"When complete, this sale will reduce Ukar’s balance sheet to £13bn, a 90 per cent reduction since formation.

"The transaction delivers against our overarching objective to dispose of assets which protect and maximise value for the taxpayer whilst treating customers fairly.”

The deal leaves Ukar with £13bn worth of assets, down from £21bn in September last year and from £116bn in 2010.

In April, it sold off £5.3bn of Bradford & Bingley assets to an investor group led by Barclays, which allowed the company to fully repay the government loan that was given to Bradford & Bingley when it was nationalised in 2008.

The news comes six months after Rothesay Life acquired part of life insurance company Prudential's annuity portfolio for £12bn.