Allen & Overy (A&O), Hogan Lovells, Linklaters and Slaughter and May have won top roles on the record-breaking £13bn asset portfolio sale by the UK Government to Cerberus Capital Management.
Slaughters partners Guy O’Keefe and Craig Cleaver advised UK Asset Resolution (UKAR), which was established five years ago to facilitate the management of the closed mortgage books of both Bradford & Bingley and Northern Rock’s mortgage business (NRAM).
As part of the transaction, UKAR will sell residential mortgages and unsecured loans from the legacy book of NRAM to affiliates of Cerberus Capital Management.
The deal is understood to be the largest ever financial asset sale by a government in Europe, with the acquirer Cerberus turning to Linklaters partners Adam Fogarty and corporate partner Tracey Lochhead.
Cerberus has agreed to sell £3.3bn of the assets to TSB Bank, giving the bank around 34,000 former Northern Rock customers. Hogan Lovells advised TSB Bank, with a team led by partners John Allison, Jon Chertkow and Rachel Kent.
A&O won a role on the financing aspects of the deal, working with the banks involved in the agreement. The team was led by securitisation partner Salim Nathoo, and included banking partners Trevor Borthwick and Ian Powell. Partners Annabelle Croker, Dan Mckimm and Lydia Challen handled corporate, real estate and tax issues respectively.
The mortgages were originally acquired by the Government during the financial crisis. They are now being sold for £280m than their book value.
Background to the deal
Slaughter and May won the mandate to act on the Northern Rock crisis in 2007, when it represented the Treasury and Financial Services Authority (FSA) as it discussed options for the troubled lender.
The firm, which acted as the Treasury’s main source of legal counsel throughout Northern Rock’s nationalisation, was reported to have billed the government more than £22m since the start of the credit crunch until 2009, an average of £1.6m a month. Of this, £9.4m were fees from the collapse and nationalisation of Northern Rock.
Even back in 2007, it was suggested Cerberus was trying to moot a bid for Northern Rock, with the latter turning to Freshfields Bruckhaus Deringer for advice throughout the saga. Freshfields also acted for Northern Rock when it was bought by A&O client Virgin Money in 2011.