State-owned bank repays £1bn

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The Independent Online

The state-owned company that runs Northern Rock Asset Management (NRAM) and Bradford & Bingley today said it had paid back another £1 billion to the government.

UK Asset Resolution said NRAM had now returned a total of £2.1 billion to taxpayers in the last 18 months, bringing its balance down to £20.7 billion at the end of June.

The update came as NRAM revealed a surge in pre-tax profits in the six months to June to £344.1 million, from £181.8 million last year, while Bradford & Bingley, reported profits of £152 million from £83.6 million.

The government split Northern Rock in two at the start of last year, forming Northern Rock plc, which is now up for sale, and NRAM to house the more toxic loans. B&B merged with NRAM shortly after it was formed.

Northern Rock plc reported a £232.4 million pre-tax loss for 2010, but insisted it was on the road to recovery.

Northern Rock was nationalised in February 2008 after it collapsed amid the credit crisis, sparking the first run on a UK bank for 150 years.

Bradford & Bingley was taken over by the Government later that year, while the group's savings business was sold to Spanish-owned Santander.

The £1 billion returned to the Government came from NRAM's outstanding balance - B&B still owes the Government £27 billion. This brings the combined debt to £47.7 billion.

NRAM saw mortgage accounts three months or more in arrears increase by 6% over the six months to June to 27,010, while B&B saw a fall of 16% to 10,956.

NRAM and B&B decreased costs by 28% and 10% respectively, while loan impairment charges also fell at both companies.

UKAR chief executive Richard Banks said: "Our aim is to maximise value for the taxpayer and we have accelerated the repayment of government debt with a further £1 billion repaid in the first half of 2011.

"Arrears at NRAM are beginning to stabilise, while arrears at B&B continue to reduce."