Shareholders in Arbuthnot Banking Group (LON:ARBB) have approved the sale of shares in Secure Trust Bank (LON:STBS) that will leave the former parent as a sub-20% shareholder in the group.
STB already has significant capital headroom to accommodate strong organic loan growth following the sale of Everyday Loans Group. Its plan to seek a Main Market listing will enable it to appeal to a broader investor audience, leaving it better placed to consider share issuance, providing greater flexibility to pursue a wider range of strategic options.
This comes at a time of rapid growth and proliferation of contenders among specialist lenders and challenger banks.
Growth and change create opportunity
Secure Trust Bank has recorded growth in customer loans and earnings per share of over 40% pa compound between 2011 and 2015, reflecting successful development of its specialist retail and commercial lending businesses against a favorable background in which the large banks’ attention is focused on core businesses and strengthening capital positions.
While challengers and specialist lenders have generally seen strong growth, like STB, they still account for only a small part of the market. The emergence of a range of contenders, each with their own market and shareholder profile, creates a dynamic market, and there should be opportunities for valuable scale efficiencies for a player that can successfully consolidate.
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