The UK Treasury has sold £13bn ($19.8 billion) of Northern Rock mortgages to US investment firm Cerberus Capital Management.

UK Asset Resolution (Ukar), the group overseeing the sale on behalf of government, will sell the loan operation known as Granite as well as a further £1bn of Northern Rock loans to Cerberus Capital Management.

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The sale would include residential mortgages and unsecured loans from the legacy book of Northern Rock Asset Management (NRAM).

The mortgages are being sold for £280m above their book value. Cerberus immediately sold £3.3bn of loans to TSB Banking Group.

The deal is considered to be the biggest sale of financial asset sale to date by a European government.

Cerberus won a six-month bidding process beating out Goldman Sachs Group and JPMorgan.

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Chancellor of the Exchequer George Osborne said in a statement said: "Today marks another major milestone in clearing up the mess left by the financial crisis. The sale, which raises 13 billion pounds for the British taxpayer, is the largest ever sale of financial assets by a British government, and we are now clear that taxpayers will get back more money from Northern Rock than they were forced to put in during the financial crisis."

The sale brings the total Ukar balance sheet reduction to £73.5bn since formation in 2010.