Following the recent sale of Everyday Loans Group, Arbuthnot Banking Group (LON:ARBB) has provided further strategic flexibility to Secure Trust Bank through the proposed sell down of its majority stake to 18.9%. The move also opens a new chapter for ARBB simplifying its corporate structure and generating substantial capital for redeployment, including the development of its commercial banking business. For the moment, the market appears particularly conservative in its valuation of the group and we see the book value of over £19 as a reasonable balance of the opportunities and risks involved in this new phase in the group’s history.
Sale of Secure Trust Bank shares
On 27 May ARBB announced the sale, conditional on shareholder approval, of a 33% holding in Secure Trust shares to institutional investors. The sale will leave ARBB with a stake of below 20%, so the investment will be treated as an associate investment and Secure Trust will no longer be consolidated. ARBB indicates that a profit of £110m will arise and the group’s surplus capital is expected to increase by over £90m. The rationale for the deal was to provide Secure Trust with more flexibility in its strategic options while crystallising value and providing capital for ARBB to deploy.
To read the entire report Please click on the pdf File Below