Secure Trust Bank sells motor finance arm after £21m hit
Specialist lender Secure Trust Bank has offloaded its motor finance arm, becoming the latest UK bank to retreat from the sector, which has been wrapped up in scandal.
The bank sold its remaining vehicle finance loan book to European Alternative Investment Fund Manager LCM Partners in a move expected to increase the bank’s CET1 ratio – a crucial metric of a bank’s financial strength – by 180 basis points and generate a net gain of £9m.
It comes after the firm set aside £21m in provisions for the forthcoming sector redress scheme.
“The completion of the sale will unlock capital to reinvest into higher-returning continuing businesses, increase market penetration to support long‐ term growth ambitions, and consider further shareholder distributions,” Secure Trust said.
In July last year, the bank said it would pause new lending within its vehicle finance division and “run off” its existing book, meaning it would manage its current portfolio until it naturally winds down. As part of the reshuffle, Secure Trust said up to 78 roles were at risk in 2025 and 284 by 2030.
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.
Last year, reports emerged that Santander, which hiked its provisions for the car mis-selling scandal to £460m this week, was poised to spin off its motor finance division as part of an overhaul of operations.
The Financial Conduct Authority (FCA) is expected to provide full details of its long-awaited redress scheme in early 2026 after it delayed its consultation amid mounting backlash from lenders and consumers.
Secure Trust loan book swells
The announcement came as the bank delivered its full-year trading update, in which it said net lending had topped £3.7bn in the final quarter, with 8.1 per cent growth across continuing business.
The bank’s shares crept up one per cent in early trading to 1,468.50p.
Secure Trust’s retail finance loan book expanded eight per cent throughout the year, whilst real estate was up 9.4 per cent.
Customer deposits were 8.2 per cent higher year-on-year, which the firm said supported growth in the lending book.
The bank forecast its adjusted pre-tax profit to exceed market consensus at £51.1m.
Chief executive Ian Corfield, who took the helm last year, said: “We have made the right decisions to reposition the Group for growth and higher returns, enabling us to deliver value to customers and shareholders.”