Secure Trust Bank has completed the sale of its motor finance division, marking a significant retreat from a sector currently embroiled in widespread scandal. The specialist lender offloaded its remaining vehicle finance loan book to European alternative investment fund manager LCM Partners.
Financial Implications and Strategic Shift
The transaction is expected to deliver a substantial boost to the bank's financial health. It will increase Secure Trust's CET1 ratio, a key measure of banking strength, by 180 basis points while generating a net gain of approximately £9 million. This strategic move follows the bank's decision to set aside £21 million in provisions for the forthcoming Financial Conduct Authority (FCA) redress scheme related to the motor finance sector.
The completion of this sale will unlock capital that we can reinvest into higher-returning continuing businesses, a spokesperson for Secure Trust stated. This will enable increased market penetration to support our long-term growth ambitions and allows for consideration of further shareholder distributions.
Background and Sector Context
Secure Trust had already signalled its exit from motor finance in July of last year, announcing a pause on new lending within the division and a plan to 'run off' its existing book. The vehicle finance business had become a significant drain, recording a loss of £21.8 million in 2024. Net lending balances stood at £558.3 million at the year's end, with the division accounting for nearly 30 per cent of the group's operating costs.
The restructuring will have a direct impact on staff, with up to 78 roles at risk in 2025 and a potential 284 by 2030. This sale aligns with a broader trend in UK banking, following reports that Santander is also poised to spin off its motor finance arm after hiking its own provisions for the car mis-selling scandal to £460 million.
Full-Year Performance and Future Outlook
The announcement coincided with the bank's full-year trading update, which revealed robust performance in its continuing operations. Net lending surpassed £3.7 billion in the final quarter, representing 8.1 per cent growth across the bank's ongoing business segments.
Secure Trust's retail finance loan book expanded by eight per cent throughout the year, while its real estate portfolio grew by 9.4 per cent. Customer deposits increased by 8.2 per cent year-on-year, providing a solid foundation for further lending growth. The bank has forecast its adjusted pre-tax profit to exceed market consensus, reaching £51.1 million.
In early trading following the update, the bank's shares edged up by one per cent to 1,468.50p. Chief executive Ian Corfield, who assumed leadership last year, commented on the strategic direction: We have made the right decisions to reposition the Group for growth and higher returns, enabling us to deliver value to customers and shareholders.
Regulatory Landscape
The sale occurs against a backdrop of intense regulatory scrutiny. The Financial Conduct Authority is expected to provide full details of its long-awaited motor finance redress scheme in early 2026. The consultation process was delayed amid mounting backlash from both lenders and consumers, highlighting the contentious nature of the ongoing sector investigation.
