UK 'bad' bank pays back £1.3bn

It's the story of a bad banks done good. Although it still owes taxpayers £42bn...

by Emma Haslett
Last Updated: 06 Aug 2013
The snappily-titled UK Asset Resolution, the state-owned holding company which has the unenviable task of running down loan books from failed lenders Northern Rock and Bradford & Bingley. Today, the company said it has paid back £1.3bn it received in government aid – proving even bad banks can do good.

Admittedly, no one expected the banks to stage a miracle recovery (henceforth ‘doing a Lloyds’). But interim results posted today show UKAR has made a solid start, with an underlying pre-tax profit of £529m in the six months to the end of June, 10% more than the year earlier.

That figure was boosted by a drop in bad loan charges. Considering the very point of UKAR’s existence is to deal with bad loans, that’s pretty good going. Sadly, it’s got some way to go: it still owes the government £42.1bn.

And although it’s avoided getting itself tangled up in the row over PPI, it has nevertheless had to set aside just over £300m to compensate disgruntled consumers.

It’s to do with the phrasing of a contract for a loan offered by Northern Rock. Essentially, the contracts for a particular product were ‘written incorrectly’ – which means borrowers are owed an average of £1,800. MT likes that kind of mistake…

During the last six months UKAR ‘discovered’ a few extra loan customers it owed, meaning it has to set aside an extra £47m.

Still, baby steps, eh? It might not be out of banking purgatory yet, but it’s certainly beginning to atone for sins of the past…

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