The portfolio will be sold by state owned “bad bank” UK Asset Resolution to US investment firm Cerberus. TSB will buy £3.3bn of the loans from Cerberus, which equates to 34,000 UK homeowners.
The transaction is considered the largest ever financial asset sale by a European government.
The mortgages are being sold for £280m above their book value, while following the sale the government will have sold more than 85% of its Northern Rock assets.
State-backed UK Asset Resolution was set up in 2010 to run down loans owned by the bankrupt Northern Rock and Bradford & Bingley.
George Osborne, Chancellor of the Exchequer, said: “Today marks another major milestone in clearing up the mess left by the financial crisis, with the sale of former Northern Rock mortgages.
“The sale, which raises £13bn for the British taxpayer, is the largest ever sale of financial assets by a British government, and we are now clear that taxpayers will get back more money from Northern Rock than they were forced to put in during the financial crisis.
“The highly competitive process, unprecedented scale, and the fact that these mortgages have been sold for almost £300m more than their book value demonstrates the confidence investors have in the UK, which has only been made possible by the success of our long-term plan.”
