UK spared 260 mn pound bill after ‘bad bank’ wins appeal

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London | Published: July 24, 2015 7:40:57 AM

The UK government will not have to pay more than 260 million pounds ($405 million) in compensation to former customers of bailed-out bank Northern Rock after winning a UK court appeal over the wording of 43,000 past loans".

The UK government will not have to pay more than 260 million pounds ($405 million) in compensation to former customers of bailed-out bank Northern Rock after winning a UK court appeal over the wording of 43,000 past loans.

NRAM Plc — which is part of a state-run ‘bad bank’ running down the old loans of Northern Rock — said the UK Court of Appeal ruled in its favour on Thursday, overturning a High Court decision in December.

The case affected customers who took out unsecured loans of more than 25,000 pounds, which had incorrect wording on the documents.

They could have had 261 million pounds, or just over 6,000 pounds each, knocked off their outstanding loans if the ruling had gone against NRAM.

The British taxpayer would effectively have picked up the bill. NRAM Plc had made a provision for the compensation and is now likely to release that.

NRAM brought the legal claim itself, hoping to get a legally binding judgment on customers who took out unsecured loans of between 25,000 and 30,000 pounds on top of their mortgages with Northern Rock between 1999 and 2008.

Northern Rock was nationalised in 2008 after almost collapsing.

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