U.S. private equity firm Cerberus Capital Management LP announced Friday it agreed to buy mortgages worth 13 billion pounds ($19.8 billion) that were acquired by the U.K. government during the 2008 financial crisis. The portfolio being sold by the state-run U.K. Asset Resolution (UKAR) includes loans originally owned by banks Northern Rock and Bradford & Bingley -- which went bust during the crisis -- and marks the largest-ever financial asset sale by a government in Europe.

“Cerberus is committed to being good stewards of these assets, and to ensuring that borrowers continue to receive exemplary service and care,” Cerberus Chairman John Snow said, in a statement. “This portfolio is an important addition for Cerberus and further demonstrates our commitment to our European mortgage and real estate investment strategy.”

UKAR, which was established in 2010 to run down the loans made by the two banks, is selling the portfolio of mortgages for 280 million pounds more than their book value, British Chancellor of the Exchequer George Osborne said, in a separate statement.

British lender TSB Bank PLC -- part of the Spanish Sabadell group -- will buy 3.3 billion pounds of the former Northern Rock mortgages and loans from Cerberus, according to media reports.

The British government has now sold more than 85 percent of the assets of Northern Rock, which, in 2007, became the first British lender in 150 years to suffer a bank run. The funds raised from the latest sale will be used to pay down the U.K.’s national debt, Osborne said, in the statement.

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