The specialist lender says move will ‘unlock capital to reinvest into higher-returning continuing businesses’

Specialist lender Secure Trust Bank has sold its motor finance division, marking another British bank’s withdrawal from a sector mired in controversy.

The bank has transferred its remaining vehicle finance loan portfolio to European Alternative Investment Fund Manager LCM Partners in a transaction anticipated to boost the bank’s CET1 ratio – a key measure of financial resilience – by 180 basis points whilst delivering a net profit of £9 million.

This follows the firm earmarking £21 million in provisions for the upcoming industry-wide compensation programme.

“The completion of the sale will unlock capital to reinvest into higher-returning continuing businesses, increase market penetration to support long‐ term growth ambitions, and consider further shareholder distributions,” Secure Trust stated.

Last July, the bank announced it would halt fresh lending through its vehicle finance arm and allow its existing portfolio to “run off”, essentially managing current commitments until they naturally expire. During this restructuring, Secure Trust warned that as many as 78 positions faced redundancy in 2025, with a further 284 by 2030, as reported by City AM.

The vehicle finance operation racked up losses of £21.8 million throughout 2024. By year-end, net lending balances stood at £558.3 million.

The unit proved a significant drain on resources, accounting for almost 30 per cent of the firm’s operational expenditure. Last year, it was reported that Santander, which recently increased its provisions for the car mis-selling scandal to £460m, was considering separating its motor finance division as part of a broader operational revamp.

The Financial Conduct Authority (FCA) is anticipated to reveal comprehensive details of its long-awaited compensation scheme in early 2026, following a delay due to growing criticism from lenders and consumers.

In other news, Secure Trust’s loan book has seen significant growth. This update came as the bank presented its full-year trading report, highlighting that net lending had exceeded £3.7bn in the final quarter, with an 8.1 per cent increase across ongoing business.

Shares in the bank saw a modest rise of one per cent in early trading, reaching 1,468.50p.

Throughout the year, Secure Trust’s retail finance loan book grew by eight per cent, while real estate saw a 9.4 per cent increase. Customer deposits were up by 8.2 per cent compared to the previous year, a trend the company said supported growth in the lending book.

The bank predicts its adjusted pre-tax profit will surpass market consensus at £51.1m.

Chief executive Ian Corfield, who assumed leadership last year, said: “We have made the right decisions to reposition the Group for growth and higher returns, enabling us to deliver value to customers and shareholders.”