Secure Trust Bank: Jobs at risk as lender exits motor finance
Specialist lender Secure Trust Bank has announced a “strategic pivot” away from its motor finance division in a bid to boost returns.
The group said it will pause new lending within its vehicle finance division and “run off” its existing book, meaning it will manage its current portfolio until it naturally winds down.
The bank cited the “historical financial performance” and “medium-term outlook” for its motor finance division.
In November, Secure Trust slashed its profit expectations due to the performance of its motor finance business, whilst early arrears in vehicle finance were at the lowest level for three years.
Should the runoff be completed and all cost actions implemented, the group projects an 800 basis point increase in return on average equity. Full-year profit before tax for 2024 would be expected to rise to £56.6m from £39.1m.
Secure Trust’s vehicle finance business generated a loss of £21.8m in 2024. Net lending balances were £558.3m at the end of the year. The division took a chunk out of the firm’s bottom line, amounting to nearly 30 per cent of operating costs.
Secure Trust puts 78 roles at risk this year
As part of the reshuffle, Secure Trust said up to 78 roles were at risk in 2025 and 284 by 2030.
The lender said it will streamline its cost base as the loan book winds down, targeting £25m of savings by 2030.
The decision comes as the Supreme Court is expected to give its verdict on whether it was unlawful for banks to pay a commission to a car dealer without the customer’s informed consent in the summer.
The Financial Conduct Authority has said it will confirm within six weeks of the Supreme Court judgment whether it is proposing to introduce a redress scheme.
David McCreadie, chief executive, said: “This pivot will allow the Group to prioritise these established specialist businesses and achieves further simplification of the group combined with the removal of a significant level of costs.
“These measures will have a material positive impact on return on average equity for the Group and will position the Group to being capital accretive.”
McCreadie is set to step down from his role at the helm of the bank in the summer. Former Treasury director Ian Corfield, who was involved in Labour’s “cronyism” scandal, will take his place.