A £5.3 billion sale of Bradford & Bingley (B&B) mortgages acquired by the UK taxpayer during the financial crisis has been authorised by Chancellor Philip Hammond.

The sale will enable the full repayment of the Financial Services Compensation Scheme (FSCS) loan to B&B, marking a major milestone in the plan to recover taxpayers’ money.

Following an auction, two portfolios of mortgages will be sold to an investor group led by Barclays Bank plc.

The proceeds from this sale will be used to repay the FSCS’s loan to (B&B) in full and in turn reduce the national debt.

There will be no changes to the terms and conditions of the mortgages sold. Borrowers do not need to take any action.

Hammond said: “We are determined to recover the money the taxpayer invested during the financial crisis as soon as we can.

“The sale of these Bradford & Bingley loans is yet another significant step in putting the crisis behind us.

“The proceeds of this sale will go towards reducing our national debt and securing a brighter future for the next generation.”

The closed loan books of B&B and NRAM Limited (formerly part of Northern Rock) are managed by UK Asset Resolution UKAR on behalf of the taxpayer.

Following this transaction, UKAR now owns £14 billion worth of assets, down from £21 billion in September 2017 and from £116 billion in 2010.

This sale will raise sufficient funds for B&B to repay its loan from the FSCS — made at the time of nationalisation to finance the transfer of customers’ deposits to Santander UK — which will, in turn, allow the FSCS to repay its own loan from HM Treasury.

Repayment of these loans will end the need for a special levy on deposit-taking banks and marks the end of a legacy of the 2008 financial crisis.

UKAR CEO Ian Hares said: “This marks a significant moment in B&B’s history with all £15.65 billion returned to the FSCS and ultimately the taxpayer.

“When complete, this sale will reduce UKAR’s balance sheet to £14.5 billion, an 87% reduction since its formation.

“The transaction delivers against our overarching objective to develop and execute divestment strategies which protect and maximise value for the taxpayer whilst treating customers fairly.”