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Tyrie questions Baldwin over Northen Rock sale price

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  • 16/12/2015
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Tyrie questions Baldwin over Northen Rock sale price
Andrew Tyrie, chairman of the Treasury Select Committee, has written to the economic secretary to the Treasury, Harriet Baldwin, to question whether former Northern Rock assets have been sold to Cerberus at the correct price.

Cerberus paid £280m over the £13bn value of the lender’s mortgage book in June when the deal was approved. It has since agreed to sell £3.3bn of the Northern Rock assets to TSB.

Northern Rock collapsed in 2007 and received a £1.4bn bailout in early 2008, however the total government bailout package for the bank was £21.7bn during the financial crisis.

The lender later split into two, with its good assets sold to Virgin Money for £970m in a mix of cash and Tier 1 notes.

The bad assets, including performing and non-performing residential mortgages and unsecured loans, were placed into Northern Rock Asset Management (NRAM) – the taxpayer-owned institution salvaged from the collapsed bank.

UK taxpayers have taken a loss of more than £250m on the sale of the lender.

Mr Tyrie (pictured) said it was good news that the Chancellor has sold the assets to Cerberus seven years after the bailout, but that concerns have been raised about the suitability as the buyer.

“The Treasury should consider not just short-term profitability, but also longer term value in its asset sales. The impact on future tax revenues – as a result of a company’s international tax arrangements – should be taken into account.”

He said customer interests also need to be considered even after the asset is off the government’s book, as those customers will want to ensure that they will not be adversely affected as a direct result of the sale.

“In the minister’s letter to me, she clarified that in her view ‘there will be no changes to the terms and conditions of the mortgages that have been sold. Customers do not need to take any action as a result of this sale.’”

He added that he has written to Harriet Baldwin to further verify her statement, and that her answers to a number of Parliamentary Questions on the matter so far have added little to her original statement.

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