Northern Rock Asset Management (NRAM), the “bad bank” created following the collapse of Bradford & Bingley and Northern Rock, has sold £400 million-worth of personal loans.
Debt recovery business Marlin Financial is buying “default” loans for which customers have failed to make repayments.
OneSavings Bank, which is backed by US private equity group JC Flowers and owns the Kent Reliance mutual, is snapping up debt that is not in default, marking its first foray into the personal loans market.
UK Asset Resolution – the body that manages NRAM on behalf of the taxpayer – wants to accelerate the winding up of the bad bank assets after last year’s sale of £465m of Northern Rock mortgages to Virgin Money.
Yet the personal loan portfolio being sold represents less than 1 per cent of the overall book managed by UKAR, worth around £68 billion and largely consisting of mortgages.
The sale – which is expected to complete within six months – will deliver a “small profit” for the taxpayer and go towards paying off the £18bn of loans outstanding following the nationalisation of Northern Rock.
OneSavings will add the loans to a number of existing brands, including Guernsey Home Loans, Jersey Home Loans and Reliance Property Loans. The average size of the loan per customer being acquired from UKAR is understood to stand at about £5,000.
OneSavings currently has around 150,000 customers and more than £3bn in assets on its balance sheet. The company was formed in 2011 after JC Flowers invested £50m into Kent Reliance, taking a 40 per cent stake in the bank.
JC Flowers lost out in the running to buy the “good” part of Northern Rock, which was sold to Virgin Money.