UK bank Bradford & Bingley has sold £4.2 billion sterling of commercial property and social housing debt to improve group liquidity, boosting its shares as credit fears stalked other lenders.
The UK mortgage lender said it had slashed its exposure to commercial property by 70% by selling £2 billion of loans at a slight discount to the real estate arm of US conglomerate General Electric.
Earlier, Bradford & Bingley also announced the sale to Belgian financial group Dexia of its entire £2.2 billion Housing Association loan book.
A spokeswoman for Bradford & Bingley said it was selling most of its commercial property loan book because banks had to set aside more capital against commercial property loans compared with residential property loans under new Basel II rules coming into effect next year.
Analysts said Bradford & Bingley's disposals - about 10% of its overall loan book - were a double-edged sword. The deal would address the bank's immediate funding needs at a time when interbank lending costs had risen but would also tie its future growth prospects to the buy-to-let and self-certified mortgage sectors.
