Treasury quizzed over sale of Northern Rock mortgages

A SENIOR MP has questioned the Chancellor’s decision to sell tens of thousands of former Northern Rock mortgages to a secretive US private equity firm.

The Government last month sold a £13bn book of home loans, issued by the Newcastle-based lender before it was nationalised, to New York-based Cerberus and British bank TSB.

The record-breaking deal was hailed as a ‘major milestone’ by George Osborne ( pictured).

But in a letter to the Treasury, Andrew Tyrie, chairman of the Treasury Committee, flagged up concerns about the future of 125,000 customers involved in the transaction, and questioned whether the exchequer would be left out of pocket due to the tax affairs of Cerberus, which purchased the loans through a Dutch subsidiary.

He said: ‘Concerns have been raised about the suitability of Cerberus as the buyer of the mortgage book. This merits further scrutiny.’

He added that ‘customers will want assurance that they will not be adversely affected as a direct result of the sale’.

‘The Treasury should consider not just short-term profitability, but also longer term value in its asset sales.

‘The impact on future tax revenues – as a result of a company’s international tax arrangements – should also be taken into account.’ The intervention came amid concerns over the future of around 1.8m Royal Bank of Scotland customers.

The state-backed lender revealed it now hopes to sell spin-off Williams & Glyn after receiving ‘informal approaches’ for the business, which includes more than 300 branches. RBS said it would continue to prepare to float the business before the end-of-2017 deadline imposed by Brussels if a sale is not agreed.

But the Government is likely to come under fire if it sells to another private equity firm, amid growing controversy surrounding the sale of the so-called ‘Granite’ portfolio of former Northern Rock loans.

Tyrie asked what steps had been taken to ensure that customers would be treated fairly – and will not see their mortgage rates hiked.

The Treasury has stressed there will be no change to the terms and conditions of the mortgages involved in the transaction, most of which were part of Northern Rock’s so-called ‘Granite’ portfolio.

But Tyrie said that he was concerned this amounted to a shortterm commitment.

He also questioned whether the Government secured a good price for the mortgages.

The Treasury said it made a £280m profit on the sale.