Disposal: Sale of Loan Portfolio
PRESS RELEASE
11 March 2022
For immediate release
LEI: 213800CXIBLC2TMIGI76
This announcement contains inside information.
SECURE TRUST BANK PLC
Sale of Loan Portfolio
Following a strategic review, the Board of Secure Trust Bank PLC ('STB' or 'Secure Trust Bank') has decided to exit the debt purchase market and announces that its subsidiary, Debt Managers (Services) Limited ('DMS'), has today agreed to sell its portfolio of loans ('Portfolio') to Intrum UK Finance Limited ('Intrum'), one of the UK's leading debt purchase companies.
The Portfolio comprises around 650,000 customer loans acquired from third parties and STB. Intrum will acquire the rights of DMS as lender to collect payments due under the loans within the Portfolio. DMS will service the Portfolio under transitional service arrangements until the customers are notified and the collection and servicing of their loans are migrated to Intrum and its systems. Following migration of the Portfolio (which is expected to take up to 6 months from completion of the sale), under the Transfer of Undertakings (Protection of Employment) Regulations 2006 all of DMS's staff are expected to transfer to Intrum.
The cash purchase consideration for the Portfolio will be determined by the financial position of the Portfolio as at completion, taking account of debt collections and of further debt purchases from STB by DMS to date, from 30 September 2021 (the reference date for the purchase price) to completion. The gross value of the Portfolio as at 30 September 2021 was £84.7 million and the value of the consideration for the Portfolio as at 30 September 2021 was £94.0 million. The actual forecasted cash consideration for the Portfolio is estimated at £79.7 million, if completion were on 31 May 2022. Completion is subject to approvals from originators of the loans. Completion is expected towards the end of HY2022.
DMS contributed a loss before tax of £0.5 million to STB's consolidated profit before tax ('PBT') in FY2021, on an unaudited basis. In FY2020, DMS contributed a loss of £5.0 million to STB's consolidated PBT, on an audited basis. STB estimates that in FY2022 the sale will (taking into account anticipated market exit costs) generate a net PBT benefit and the release of around £72 million of risk weighted assets on completion, with the associated capital release being reinvested into STB's remaining businesses and for other general corporate purposes.
The sale is in line with STB's strategy to focus on specialist lending segments that have the strongest prospects for delivering sustainable and profitable medium to long-term growth . Following the sale, STB remains well positioned for growth, building on its strong foundations in its attractive, specialist lending markets.
As a result of the sale, and the change in the STB group's lending mix, STB plans to update its medium term targets as part of its FY2021 financial results due to be published on 24 March 2022. STB expects that the sale will enable an improvement in its cost income ratio, albeit with a reduction in net interest margin due to this lending mix change.
The loan sale agreement contains warranties, indemnities and other terms customary for a transaction of this nature.
STB is also entering into a forward flow agreement with Intrum to enable it to sell consumer and vehicle finance loans to Intrum at agreed pricing.
David McCreadie, Chief Executive Officer of Secure Trust Bank, said:
"The sale is in line with STB's strategy to simplify the Group and focus on businesses that have the strongest prospects for delivering sustainable and profitable medium to long-term growth as outlined at our Capital Markets Day in November 2021. Within these businesses, our key priority is to help more customers, extend our product offerings and further enhance our digital capabilities. The estimated net benefit and capital released in FY2022 from this sale will facilitate swifter progress in these areas.
I would like to thank all our colleagues in DMS in advance for their continued support of our customers as loans are transferred to Intrum. We consider that Intrum has an approach, policies and controls designed to ensure that these customers will continue to be treated fairly."
The sale constitutes a Class 2 transaction for STB for the purposes of the Financial Conduct Authority's Listing Rules, and this announcement is made in accordance with STB's disclosure obligations under Chapter 10 of those Rules.
Enquiries:
Secure Trust Bank PLC
David McCreadie, Chief Executive Officer
Rachel Lawrence, Chief Financial Officer
Tel: 0121 693 9100
Stifel Nicolaus Europe Limited (Joint Broker)
Robin Mann
Gareth Hunt
Stewart Wallace
Tel: 020 7710 7600
Canaccord Genuity Limited (Joint Broker)
Andrew Potts
Tel: 020 7523 8000
For Press enquiries:
Tulchan Communications
Tom Murray
Misha Bayliss
Tel: 020 7353 4200
ENDS
The person responsible for the release of this information on behalf of STB is Mark Stevens, 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 UK domestic and global economic and business conditions, risks concerning borrower credit quality, market related risks including interest rate risk, inherent risks regarding market conditions and similar contingencies outside STB's control, the COVID-19 pandemic, expected credit losses in certain scenarios involving forward looking data, any adverse experience in inherent operational risks, any unexpected developments in regulation or regulatory, 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:
Secure Trust Bank is an established, well‐funded and capitalised UK retail bank with a 70 year trading track record. Secure Trust Bank operates principally from its head office in Solihull, West Midlands.
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, One Arleston Way, Solihull, B90 4LH.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
Latest directors dealings
- 1 hour ago Johnson Matthey
- 3 hours ago Galliford Try
- 3 hours ago Galliford Try
- 3 hours ago Centrica
- 3 hours ago Smith & Nephew