THE Treasury has sold £13 billion of Northern Rock mortgages to investment firm Cerberus Capital Management in what is described as the largest ever asset sale by a European government.

Crossflatts-based UK Asset Resolution , the "bad bank" created in 2010 to run down the loans in Northern Rock and Bradford & Bingley, said the sale would include residential mortgages and unsecured loans from the legacy book of Northern Rock Asset Management.

The sale represents a £280 million premium over book value at June 30 2015, according to UKAR, which added that it expects to repay around £5.5 billion of the NRAM Government loan as a result of the transaction.

Mortgage customers affected do not need to do anything as they will be contacted directly to explain the change and there will be no change to the terms and conditions of the mortgages involved.

Richard Banks, UKAR executive said: "The sale of this loan book is a significant step in accelerating the repayment of our government loans and demonstrates our continuing success in maximising value for taxpayers. I am also delighted UKAR will continue to service these loans."

Chancellor George Osborne said it was clear that taxpayers would receive more money from Northern Rock than they put in during the financial crisis, and the move means the Government has offloaded more than 85 per cent of the assets of the former bank.

He said: "Today marks another major milestone in clearing up the mess left by the financial crisis, with the sale of former Northern Rock mortgages.

The sale brings the total UKAR balance sheet reduction to £73.5 billion since 2010.