REG - Secure Trust BankPLC - Sale of Consumer Vehicle Finance Business

Secure Trust BankAnnouncement

Wed 12:30

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RNS Number : 8703M  Secure Trust Bank PLC  24 December 2025

PRESS RELEASE

Secure Trust Bank PLC

24 December 2025

For immediate release

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

SECURE TRUST BANK PLC

Sale of Consumer Vehicle Finance Business

 

Highlights

·      Sale of Consumer Vehicle Finance Business at a premium to book
value expecting to generate a small gain on sale

·      The transaction increases Group pro forma CET1 ratio by
approximately 195bps

·      The completion of the sale will unlock capital to reinvest into
higher returning strategic priorities, to support long-term growth ambitions
and to consider further shareholder distributions

Secure Trust Bank PLC ("STB" or the "Group"), a leading specialist lender,
announces that it has entered into a business sale agreement to sell its
Consumer Vehicle Finance business(1) (the "Business"), which comprises
Consumer Vehicle Finance loans (the "Portfolio") and certain associated
assets, to funds managed by LCM Partners, a leading European Alternative
Investment Fund Manager (the "Purchaser").

On 2 July 2025 STB announced that it would stop new lending in its Vehicle
Finance business and run-off its remaining portfolio of loans. The Business
sale accelerates this decision and is in line with the Group's strategic
ambition to improve Return on Average Equity ("ROAE") over time and focus on
deploying capital in its higher returning Core businesses.

The estimated consideration for the Business sale is £458.6 million(2,3), a
premium to the Portfolio's book value (which on 30 September 2025 was £442.5
million(3)). The final consideration is subject to adjustment on completion
using a locked box mechanism(2). The sale is expected to generate a small net
gain on sale, after accounting for applicable transaction costs, and will
complete during Q1 2026. A substantial cash deposit has been received by STB
with the full consideration payable in cash on completion.

On completion¸ STB will derecognise the Portfolio and will service the
Portfolio on commercial terms on behalf of the Purchaser until a targeted
migration date in Q2 2026. The Group will remain responsible for
administering, and retain liability for, payments due to customers under the
FCA's motor finance commissions redress scheme (when finalised) for any
relevant loans in the Portfolio that meet the criteria for redress. The
Vehicle Finance business incurred a loss of £4.5 million(3,4) in H1 2025;
its direct cost base in H1 2025 was c.£15.1 million(3); the Business had a
net lending balance of £501.3 million(3) at 30 June 2025.

On completion, the reduction in risk weighted assets associated with the
Portfolio will significantly improve the Group's capital ratios. On 30
September 2025, the Group had a pro forma Common Equity Tier 1 ("CET1") ratio
of 12.8%(5). On a revised pro forma basis, reflecting the Portfolio sale,
STB's CET1 ratio as at 30 September 2025 would increase by
195bps to 14.8%(6). The Group is reviewing its capital allocation strategy,
including considering the opportunity for (subject to regulatory approval)
share buy backs. A further update on the Business sale and on the Group's
trading for the year ending 31 December 2025 will be provided in early 2026.
As previously announced, an update on the Group's strategic plans and updated
medium-term targets will be provided in Q1 2026.

Having considered the strategic benefits of this transaction, the Board
believes that the sale of the Business is in the best interests of
shareholders as a whole.

CEO Ian Corfield said:

"This transaction is a significant step forward in delivering on our strategic
priorities, focusing capital and energy on Core business areas and improving
our returns for shareholders. I look forward to sharing updated strategic
priorities in due course, including clear plans on how we will deploy the
capital released by this transaction to deliver long-term value for
shareholders."

The sale constitutes a significant transaction for STB for the purposes of the
FCA's Listing Rules, and this announcement is made in accordance with STB's
disclosure obligations pursuant to Chapter 7 of those Listing Rules.

Footnotes:

1. The Consumer Vehicle Finance business includes the debt portfolio of hire
purchase and personal contract purchase loans, and certain other associated
assets, including the Moneyway brand and customer related intellectual
property.

2. The consideration for the business is based on a 30 September 2025 balance
sheet valuation which is adjusted to the date of completion (the locked box
mechanism) for cash collections on the Portfolio, changes in a benchmark
index, servicing expenses, funding costs and servicing fees. The final
adjusted consideration will only be known at completion.

3. Unaudited.

4.  £4.5 million loss prior to allocation of central costs.

5. On 20 October 2025, the Group announced an expected increase in provisions
relating to motor finance commissions. In that announcement, the Group
reported that on a pro forma basis, as at 30 September 2025, STB had a CET1
ratio of 13.3%. The Group also announced it estimated that the additional
expected provision due to motor finance commission redress resulting from the
FCA consultation was £16 million and this reduced the CET1 ratio by c. 50
basis points to 12.8%.

6. The revised pro forma CET1 ratio at 30 September 2025 reflects 1) the
Portfolio had estimated credit risk-weighted assets of £333.6 million at that
time and 2) the Business sale is expected to generate a small profit after tax
which will increase CET1. There could be further benefits to capital ratios
from a reduction in operational risk-weighted assets which is not reflected in
the revised pro forma CET1 ratio.

 

Enquiries:

Secure Trust Bank PLC

Ian Corfield, Chief Executive Officer

Rachel Lawrence, Chief Financial Officer

Phil Deakin, Strategy and Corporate Development Director

Tel: +44 (0)121 693 9100

 

Investec Bank plc (Joint Broker)

Christopher Baird

David Anderson

Maria Gomez de Olea

Tel: +44 (0) 20 7597 5970

 

Shore Capital Stockbrokers (Joint Broker)

Mark Percy / Sophie Collins (Corporate Advisory)

Guy Wiehahn / Oliver Jackson (Corporate Broking)

Tel: +44 (0) 20 7408 4090

 

Camarco

Geoffrey Pelham-Lane, Amrith Uppuluri

securetrustbank@camarco.co.uk (mailto:securetrustbank@camarco.co.uk)

Tel: +44 (0) 7733 124 226, +44 (0) 7763 083 058

The person responsible for this announcement is Lisa Daniels, Group Company
Secretary.

 

Forward looking statements

This announcement contains forward-looking statements about the business,
strategy and plans of STB and its current objectives, targets and expectations
relating to its future financial condition and performance. Statements that
are not historical facts, including statements about STB's or management's
beliefs and expectations, are forward-looking statements. By their nature,
forward-looking statements involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future. STB's actual
future results may differ materially from the results expressed or implied in
these forward-looking statements as a result of a variety of factors. These
include economic and business conditions, risks from failure of clients,
customers and counterparties, market related risks including interest rate
risk, risks regarding market conditions outside STB's control, expected credit
losses in certain scenarios involving forward looking data, operational risks,
legal, regulatory, or governmental developments, and other factors. The
forward-looking statements contained in this announcement are made as of the
date of this announcement, and (except as required by law or regulation) STB
undertakes no obligation to update any of its forward-looking statements.

 

About STB

STB is an established, well‐funded and capitalised UK retail bank with a
72‐year trading track record. Secure Trust Bank operates principally from
its head office in Solihull, West Midlands. The Group's diversified lending
portfolio currently focuses on two sectors:

(i) Business Finance through its Real Estate Finance and Commercial Finance
divisions; and

(ii) Consumer Finance through its V12 Retail Finance division.

Secure Trust Bank PLC is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential Regulation
Authority.

Secure Trust Bank PLC, Yorke House, Arleston Way, Solihull, B90 4LH.

 

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