The banking group behind mutual Kent Reliance has agreed a deal to snap up a portfolio of personal loans from nationalised Northern Rock in a move that will see it add 70,000 new customers.
OneSavings Bank, which is backed by US private equity group JC Flowers, is buying Northern Rock Asset Management's loans that are not in default - marking its first foray into the personal loans market.
UK Asset Resolution - the group that manages the so-called "bad bank" assets of state-owned Northern Rock and Bradford & Bingley - said it had also agreed to sell the remainder of NRAM's personal loans, which are in default, to debt recovery business Marlin Financial.
It will receive a combined £400 million from the sales.
Around 140,000 customers will transfer to the new owners following the deal, but UKAR stressed it will not affect the terms and conditions of their loans.
The sale - expected to complete within six months - will deliver a "small profit" for the taxpayer and go towards paying off the £18 billion of loans outstanding following the nationalisation of Northern Rock, according to UKAR.
It comes as UKAR looks to accelerate the winding up of the bad bank assets, following the sale of £465 million of Northern Rock mortgages to Virgin Money last year.
But the personal loan portfolio represents less than 1% of the overall loan book managed by UKAR, worth around £68 billion and largely consisting of residential mortgages.
OneSavings will add the loans to a number of existing home loan brands, including Reliance Property Loans, Jersey Home Loans, Guernsey Home Loans, Interbay Group and Prestige Finance.
It said the average size of the loan per customer being acquired from UKAR stands at around £5,000.
OneSavings currently has around 150,000 customers and more than £3 billion in assets on its balance sheet.
It was formed in 2011 after JC Flowers invested £50 million into Kent Reliance, taking a 40% stake in the new bank.
JC Flowers lost out in the running to buy the "good" part of Northern Rock, which was sold to Virgin Money. Marlin is a specialist debt buyer, founded in 2002, which manages around £2 billion in loans.
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