Bradford & Bingley (B&B) has sold two of its loan books to help it generate liquidity and invest in more profitable areas it was announced today.
The news sent B&B’s share’s up 6%, after a series of recent falls in its share price as analysts worried the bank might have funding problems.
The bank has sold its housing association loan book to Dexia, a hedge fund, for £2.2bn, while its commercial property loans were sold to GE Real Estate for £2bn.
The two loan books accounted for around £46m of group profits, though the firm will retain an £800m interest in commercial property loans.
Bradford & Bingley says it has sold the loan books to allow it to focus on its more profitable business of residential mortgages and retail savings accounts.
The combined disposals are expected to produce a loss on disposal in the range of £15m to £40m.
Steven Crawshaw, chief executive of B&B, comments: “These disposals are a natural step in the development of Bradford & Bingley's strategy. The £4.2bn proceeds will enable us to improve returns by redirecting capital and funding resources to take advantage of the significant opportunities that exist in the UK mortgage market today”
The bank says it will issue revised H1 2007 and 2006 figures to take account of the disposal and will issue a pre-close trading statement on 29 November.
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