The "bad bank" parts of Northern Rock and Bradford & Bingley paid £2.15bn back to the taxpayer last year. But that still leaves the banks, which were merged as UK Asset Resolution (UKAR), with an outstanding £46.6bn owed to the Treasury.
"Our aim is to repay all that debt – to repay it and make a profit for the taxpayer," said Richard Banks, the chief executive. "We are well on course to do that having met or exceeded all our financial targets in the last year."
UKAR – which no longer does any new business but still holds more than 700,000 of what were deemed to be the most risky home loans in Northern Rock and Bradford & Bingley after they were nationalised – made a profit of £1.1bn in 2011 up from £444m.
It also paid £688m to the Government in interest, fees and corporation tax last year. In August, the Treasury raised the interest rate on part of its loans from 1.5 per cent above base rate to 5 per cent above, which will increase the interest paid in a full year by £250m.
Mr Banks said it was acceptable that the mortgage lender was "paying a more commercial rate of interest". Mr Banks added that he still expected to have paid back the vast majority of the taxpayer loans within 10 to 12 years.
UKFI, the body that holds the taxpayer stakes in the bailed-out and nationalised banks, this week said it expects the Treasury ultimately to receive between £95bn and £97bn from the sale of Northern Rock to Virgin Money and the run-off of the two "bad banks".
That is against the total of £64bn of taxpayer money pumped into them. Mr Banks said he was also pleased the number of customers who have missed three months' mortgage payments or more had fallen 14 per cent in the last year to 33,216.
He said: "Obviously low interest rates are a good thing for my customers and this business. But they are all facing increases in the cost of living which puts pressure on their ability to make mortgage payments." Mr Banks also revealed that he is now in a position to sell on portfolios of mortgages to banks or other financial institutions.
But he said: "We have received plenty of approaches but none which we would regard as sensible. Someone who is offering us 50p in the pound doesn't make sense when we are meant to be maximising the return to the taxpayer."
Northern Rock was nationalised in February 2008. Bradford and Bingley was carved up in September that year, with Santander buying the branch network and savings business and the mortgage book being nationalised.
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