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Financial Services

I can today confirm that I have laid a Treasury Minute informing the House of a reduction in HM Treasury’s contingent liabilities to NRAM plc (formerly Northern Rock (Asset Management) plc).

The Treasury Minute concerns the guarantee arrangements announced on 8 December 2009 that put in place arrangements in relation to certain borrowings and derivative transactions of, and certain wholesale deposits held in accounts with, NRAM plc. At March 2015 the maximum contingent liability to HM Treasury on this guarantee arrangement was £6.5 billion.

The reduction is a result of the sale announcement on 13 November that UK Asset Resolution (UKAR), the holding company of NRAM (formerly Northern Rock Asset Management) had sold £13 billion of mortgages, consequently HM Treasury’s contingent liabilities have reduced as securities associated with the Granite securitisation vehicle have been extinguished. As a result of this the HM Treasury exposure under this guarantee arrangement has fallen to around £270 million.

I will update the House of any further changes to UKAR associated guarantee arrangements as necessary.

If the remaining liability is called, provision for any payment will be sought through the normal Supply procedure.