Secure Trust Bank - Drawing the line under mortgages exit
Secure Trust Bank (STB) announced on 23 July it has agreed the sale of its entire residential mortgage loan book to Jacqali Designated Activity Company, a financing vehicle created in 2021 by an undisclosed global financial institution. STB estimates the sale price at £54.6m and above net book value. Mortgages represent 2% of loan book so the sale is not needle moving – we estimate 10–20bp might be added to our FY21 forecast tier 1 capital ratio of 13.6%. STB stopped writing new business before the pandemic started in 2020, viewing market conditions as creating unattractive risk adjusted margins in this segment. This sale simplifies the group structure and draws a line under STB’s exit from the business. The capital will be reallocated to STB’s remaining business and general corporate businesses. We forecast STB’s loan growth to be 5.1% in FY21 and for it to increase to 15.3% in FY22.Secure Trust Bank is involved in banking and financial services. Co.'s segments are: real estate finance, which include residential and commercial investment and development loans; asset finance, which include loans to small and medium sized enterprises; commercial finance, which include invoice discounting and invoice factoring; personal lending, which include unsecured consumer loans; motor finance, which include hire purchase agreements; retail finance, which include point of sale unsecured finance; and residential mortgages, which is for the self-employed, contract workers. As of Dec 31 2017, Co. had total assets of £1.89 billion and total customers deposits of £1.48 billion.
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