Secure Trust Bank to sell off consumer lending business for £127m
SOLIHULL-based financial services group Secure Trust Bank (STB) told the London Stock Exchange this morning that it is proposing to sell off its branch based non-standard consumer lending business Everyday Loans Group (ELG) for a total of £127m.
It is to be acquired by London-based Non Standard Finance (NSF) which will also repay c.£108m intercompany debt on completion.
The acquisition will be funded by £107m of cash and £20m in NSF ordinary shares.
Everyday Loans, based in Buckinghamshire, provides unsecured loans to more than 37,000 customers, predominantly in lower income groups. It operates through a national network of 36 branches where loans are originated, serviced and collected.
It forms part of STB’s consumer finance division, alongside motor finance provider Moneyway which is not part of the disposal.
Secure Trust says it expects to see post tax profit on the disposal of not less than £115m. Completion of the deal is expected in the first quarter of 2016
Paul Lynam, chief executive officer of Secure Trust Bank, said: “The unsolicited approach from Non Standard Finance PLC for the Everyday Loans Group presented an attractive option to accelerate our strategy of proportionately reducing our exposure to personal unsecured loan products whilst we invest in our strongly growing motor, retail and SME lending activities.
“By monetising substantial levels of future potential profit we are creating material tangible shareholder value now. This transaction, when completed, broadens the range of strategic options available to us which we will consider in more depth and update the market in due course.
“I believe today’s announcement demonstrates the board’s commitment to the robust control of the growth of the bank through changes to the composition of the lending portfolio.”
ELG generated pre-exceptional profit before tax of £12.9m in FY14.
John van Kuffeler, NSF’s chairman, said: “Our second acquisition demonstrates the board’s continued focus on creating a multi-faceted non-standard consumer finance business and I am delighted to announce further progress in the implementation of our strategy.
“With the completion of this acquisition we will have operations in all of our current target sub-sectors. Everyday Loans is a leading branch-based non-bank lender in the U.K. and its guaranteed loans operations, whilst small, provide a platform for growth in that market.
“Everyday Loans is a strong and differentiated business for which we have exciting expansion plans. By applying our expertise and management skills we intend to grow its branch network; widen its customer base; and accelerate growth in its guaranteed loans business.”
