Britain’s ‘bad bank’, which is running down the loans of two bailed-out lenders, said it repaid £3.7 billion to the government in the year through March 2015, bringing the total it has repaid to £14.1 billion.

UK Asset Resolution (UKAR), a state-run ‘zombie bank’ that does not take on new business, said it had reduced the size of its balance sheet by a further £8.8 billion during the period, bringing the total reduction since its formation in 2010 to £49.7 billion, down almost 43 per cent.

UKAR, which is winding down the loans of Northern Rock and Bradford & Bingley, in April began selling a portfolio of mortgages worth £13 billion and selling or outsourcing its mortgage servicing operations.

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