Britain's 'bad bank' expects to sell Bradford & Bingley loans by March

(Adds details, CEO comments)

By Noor Zainab Hussain

July 4 (Reuters) - Britain's 'bad bank', which is charged with winding down the assets of two bailed-out lenders, said it expects to sell the remainder of its Bradford & Bingley's mortgage portfolio by March next year, as it seeks to recoup taxpayers' money.

UK Asset Resolution (UKAR) said in 2016 it would sell Bradford & Bingley's 15.65 billion pound ($20.2 billion) mortgage portfolio in two or three tranches, after the an earlier sale was delayed in the aftermath of the country's vote to leave the European Union.

It sold the first tranche in March to insurer Prudential (Amsterdam: PD8.AS - news) and buyout firm Blackstone (NYSE: BX - news) for 11.8 billion pounds.

"We are working on the next phase of the programme which we look to launch in the next months with a full repayment expected by March 2018," said Ian Hares, chief executive of UKAR.

Sky News reported last week that Blackstone was now looking to buy as much as 6 billion pounds of Bradford & Bingley mortgage loans.

Hares said that a sale is in the works, but a formal process had not been launched yet.

"I am not in a position to confirm any names because the process has not been formally launched yet. But, there are a number of interested parties," he said.

"Blackstone bought the last one so it wouldn't be a surprise if they are in there again."

Sky (Frankfurt: 893517 - news) also named OneSavings Bank (Stuttgart: 2OS.SG - news) , Och-Ziff, and hedge fund TPG (Taiwan OTC: 6521.TWO - news) as interested parties.

UKAR, a state-run loan firm that does not take on new business, said on Tuesday it repaid 3.3 billion pounds ($4.27 billion) to the government last year.

UKAR has now returned 23.7 billion pounds to the government, almost half the total value it owed when it was created in October 2010.

UKAR is winding down the loans of Northern Rock and Bradford & Bingley, which were nationalized in the run-up to the 2008 financial crisis.

UKAR's underlying profit before tax fell by almost 33 percent to 706 million pounds in the year ended March, reflecting in part a 9 billion pound reduction in its loan book. ($1 = 0.7739 pounds) (Reporting by Noor Zainab Hussain in Bengaluru; Editing by Rachel Armstrong/Keith Weir)