Challenger bank Secure Trust (LON:STB) is to offload its branch-based consumer lending business, Everyday Loans Holdings, to Non Standard Finance (LON:NSF).
Non Standard Finance will pay £107mln in cash and £20mln in shares to Secure Trust, and will repay around £108mln of debts owed by Everyday Loans to Secure Trust.
Secure Trust said it would retain its Moneyway personal lending business, and revealed it was Non Standard Finance (NSF) was the party that first broached the idea of the sale of Everyday Loans.
Paul Lynam, chief executive officer of Secure Trust, said the disposal, which is still subject to the approval of NSF shareholders and regulatory clearance, presented an attractive option to accelerate the bank's strategy of reducing its exposure to personal unsecured loan products while building up its motor, retail and small & medium enterprises (SME) lending activities.
“This transaction, when completed, broadens the range of strategic options available to us which we will consider in more depth and update the market in due course. I believe today's announcement demonstrates the board's commitment to the robust control of the growth of the bank through changes to the composition of the lending portfolio," Lynam said.
Shares in NSF shed 5% at 89.32p in early deals while Secure Trust Bank shares raced ahead 8.6% to 3,299p.