Taxpayers get back £4bn from collapsed banks

THE state-owned firm responsible for winding down the mortgage books of failed lenders Bradford & Bingley and Northern Rock increased its repayments to the Treasury by £1.2 billion last year.

UK Asset Resolution (UKAR) paid £4bn to the taxpayer in 2012, up from £2.8bn a year earlier.

The company, which has almost 615,000 customers, said the proportion of mortgages three or more months in arrears fell 23 per cent, helped by low interest rates and “proactive arrears management”.

UKAR was formed in 2010 to manage the loan books of B&B and Northern Rock after the former building societies failed during the financial crisis.

Chairman Richard Pym said its debt to the Treasury has since fallen from £48.7bn to £43.4bn.

He added: “We still have a long way to go, but it remains our expectation and determination to repay that debt in full.”

UKAR set aside a further £130 million in 2012 to compensate customers mis-sold payment protection insurance (PPI) by Northern Rock, taking its total PPI bill to £368m. It also said a paperwork mistake, uncovered last year, will cost it about £271m in repayments to customers.

It admitted the error in December after documents and statements sent to customers of Northern Rock Asset Management, one of its predecessors, did not comply with the Consumer Credit Act.

Combined with debt buy-backs, these charges hit UKAR’s bottom line, with pre-tax profits almost halving to £690.5m.