The Government has raised almost £12bn offloading the remnants of Bradford & Bingley, the mortgage lender that collapsed at the height of the financial crisis, in one of Europe’s biggest ever state asset sales.

American private equity giant Blackstone and FTSE 100 insurer Prudential are buying two portfolios of buy-to-let mortgages from UK Asset Resolution (UKAR) for £11.8bn, in a deal that Philip Hammond, the Chancellor, said “marks another major milestone” for taxpayers.

It is one of the largest ever sales undertaken by a European government and is likely to be the last big disposal of mortgages that fell into UK taxpayers’ hands during the banking meltdown almost a decade ago.

Prudential and Blackstone saw off a host of bidders for the loans including the influential US hedge fund Elliott and Cerberus, the American buy-out firm that snapped up £13bn of Northern Rock mortgages in 2015 and then sold on a £6.1bn chunk. The Treasury said it had been “a highly competitive sale process”.

The deal means that UKAR’s balance sheet has now shrunk to £22bn from £116bn seven years ago, when it was set-up to run-off the bad loans made by B&B and Northern Rock, which both failed and were nationalised when the credit crunch hit.