12:43pm Tuesday 26th March 2013
By Andy Richardson
THE company running the so-called bad part of Northern Rock repaid £4bn to taxpayers in its last financial year and said it expects to repay all of its government loans in full.
However, UK Asset Resolution Limited (Ukar) which manages Northern Rock Asset Management and the collapsed Bradford and Bingley still owes the Treasury £43.4bn.
It has been set the target of repaying all debts by 2021. Its chairman Richard Pym, admitted: “We still have a long way to go.”
Ukar, which has almost 615,000 customers, announced that the proportion of mortgages three or more months in arrears fell 23 per cent, helped by low interest rates.
However, it confirmed that a significant number of its customers – thought to be about 60,000 – were struggling to meet their repayments.
Ukar was formed in October 2010 to manage the loan books of Bradford & Bingley and Northern Rock after the former building societies failed during the financial crisis.
A year later the Government split Northern Rock in two, forming Northern Rock plc, which was sold to Virgin Money, and Northern Rock Asset Management (NRAM) to house what were regarded as the more toxic loans. It has about 2,400 employees in the North-East and West Yorkshire.
In its end-of-year statement, the business said it set aside another £130m last year to compensate customers missold payment protection insurance (PPI) by Northern Rock, taking its total bill for PPI to £368m.
It also said a paperwork mistake, uncovered last year, will cost it about £271m in repayments to customers. It was forced to admit the error in December after documents and statements sent to customers of Northern Rock Asset Management – one of its predecessors – did not comply with the Consumer Credit Act.
Combined with debt buybacks, these charges hit Ukar’s bottom line, with pretax profits almost halving to £690.5m.
The number of accounts three or more months in arrears fell to 25,581 in 2012 from 33,216 a year earlier, helping its bad debt charge fall from £390 million to £241m. It repossessed 7,326 properties in 2012, down from 8,848 in 2011.
The company is due to close its offices in Newcastle later this year and transfer staff to its call centres at Doxford Park, in Sunderland, and Bradford.
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