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Blackstone lines up £6bn swoop on B&B loans

Blackstone, the New York-based private equity giant, is preparing to swallow another multibillion-pound portfolio of loans owned by bailed-out British banks with an offer for a portfolio issued by Bradford & Bingley.

Sky News has learnt that Blackstone has expressed an interest in a £6bn mortgage book that the Government plans to sell later this year.
It comes just three months after Blackstone and Prudential, the FTSE-100 insurance group, bought £11.8bn of B&B loans in one of the largest asset sales by a state-controlled lender since the financial crisis.
Blackstone, which is the joint owner of Kensington, the sub-prime mortgage lender, will be part of a wide field of bidders for the £6bn chunk of buy-to-let and residential mortgages.
OneSavings Bank, Och-Ziff and the hedge fund and buyout firm TPG are among the other parties expected to consider offers, either individually or as part of consortia.
Morgan Stanley, the Wall Street bank hired by ministers to oversee the sale, has begun contacting prospective bidders.
The majority of the mortgages for sale were issued by B&B, while a smaller tranche relates to assets acquired from GMAC-RFC and Kensington Mortgages
The Treasury had originally identified about £3bn of mortgages to be sold later this year, but that target has since been revised upwards.

A successful sale of the £6bn B&B book would generate sufficient proceeds to repay a big chunk of the outstanding loan made by the Treasury to the Financial Services Compensation Scheme (FSCS) in 2008.
It would represent a further phase of the Government’s efforts to recover as much of the capital ploughed into the banking industry during the financial crisis as possible.
The £20bn used to rescue Lloyds Banking Group has now been returned to taxpayers, generating a modest profit, with tens of billions of pounds coming from the disposal of the customer base of Northern Rock to Virgin Money, and loans made by both it and B&B.
However, the Government is unlikely to recover more than half of the £45.5bn used to prop up Royal Bank of Scotland (RBS).
Philip Hammond, the Chancellor, acknowledged before the General Election that the Government would be forced to crystallise a huge loss when its 72% RBS shareholding is eventually sold.
UKAR’s balance sheet, which stood at £116bn in 2010, has been whittled down to £22bn following the £11.8bn sale of the last B&B mortgage portfolio to Blackstone and Prudential.
Blackstone and OneSavings Bank declined to comment.

Source: Sky

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