TIDMSTB
RNS Number : 4218E
Secure Trust Bank PLC
11 March 2022
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 GBP84.7 million
and the value of the consideration for the Portfolio as at 30
September 2021 was GBP94.0 million. The actual forecasted cash
consideration for the Portfolio is estimated at GBP79.7 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 GBP0.5 million to STB's
consolidated profit before tax ('PBT') in FY2021, on an unaudited
basis. In FY2020, DMS contributed a loss of GBP5.0 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 GBP72 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.
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END
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