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‘Big six’ plan £17bn refinancing deal on Bradford and Bingley loans – reports

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  • 02/03/2016
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Six of the UK’s biggest high street lenders are reportedly planning to guarantee around £17bn of financing to the purchasers of remaining Bradford and Bingley loans (B&B).

According to a Sky News report, the lenders are preparing to submit proposals to the Treasury within days which would see the firms form a special purpose vehicle to shelter the loans in preparation for a possible sale to external investors.

Sky News added that the Chancellor is expected to announce the sale plan in this month’s Budget.

The banks and building societies reportedly involved in the plans are HSBC, Barclays, Nationwide, Lloyds, Royal Bank of Scotland and Santander.

Lenders have a vested interest in offloading the B&B portfolio from the government’s balance sheet as they are liable for the interest on the loan that was used to fund it during the financial crisis. Interest on the loan totalled £400m last year alone, paid by lenders through a Financial Services Compensation Scheme levy.

Outstanding borrowings would be repaid by the lenders prior to a sale, thereby accelerating the removal of B&B loans from the government’s balance sheet.

Santander purchased B&B’s retail deposit business and branches in 2008, following a government bailout during the financial crisis, with its remaining assets and liabilities taken into public ownership.

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