The move follows a review of the growth potential and capital utilisation of these assets. The book is being sold for cash proceeds representing the book value of the loans transferred, adjusted to reflect break-funding charges. In 2006, these assets contributed approximately £21 million to group profits.
The group said selling these assets would enable it to focus its activities on profitable growth in the core business of residential mortgage lending and retail savings. The cash proceeds of £2.2 billion will further increase the group's liquidity and provide funding for attractive, higher margin opportunities in these markets.
Commenting on the sale, Steven Crawshaw, group chief executive said: "The board concluded back in April that the sale of our housing association book was a natural step in the development of Bradford & Bingley's strategy. It enables us to improve returns by redirecting our capital and funding resources to take advantage of the significant opportunities that exist in the UK mortgage market today."
