Britain has sold £13 billion of loans once held by former mortgage lender Northern Rock to US private equity firm Cerberus, marking the biggest ever sale of a book of loans in Europe.

Northern Rock, which was nationalised after nearly collapsing in 2007, came to symbolise the financial crisis in Britain and the sale of the 125,000 loans represents the latest stage of the British government’s push to sell assets to help to pay down the national debt.

“Today marks another major milestone in clearing up the mess left by the financial crisis,” finance minister George Osborne said.

The loans were sold for £280 million more than their book value, recouping money for taxpayers.

Push to sell assets to help pay down the national debt

Osborne is aiming to raise more than £30 billion over 2015-16 by selling off publicly owned assets, and he said proceeds have now reached over £24 billion since April 1.

In the past few months, the British government has sold more of its shares in Lloyds Banking Group and started to sell off parts of its stake in Royal Bank of Scotland.

Cerberus will sell £3.3 billion of the loans, or a quarter to TSB, the British bank that was bought this year by Spain’s Sabadell.

The sale of the Northern Rock portfolio, dubbed “Granite”, cements Cerberus’ position as the biggest buyer of loans that are no longer wanted by European banks which are shrinking in the wake of the financial crisis.

The New York-based firm, named after the mythical three headed dog that guards the gates of Hades, has bought more than €27 billion of European loans in the last three years.

In the first nine months of this year, it bought eight loan portfolios in Europe with a combined face value of €7.7 billion, more than any other firm, according to real estate brokers Cushman and Wakefield.

Most of the loans bought in recent years have been at knock-down prices, but the premium paid for the Granite portfolio was because most of the loans are being repaid and there was stiff competition for the assets.

UK Asset Resolution (NRAM), the body that is running down the Northern Rock loans, said 96 per cent of Granite’s customers were up to date with payments and the portfolio was spread across Britain with an average mortgage of £100,000. The portfolio also included unsecured loans sold by Northern Rock called ‘Together’ loans, which were tied to mortgages.