Solihull-based Secure Trust Bank has taken over a loans business.
Secure Trust (STB), which listed on the London Stock Exchange last year, has taken over Everyday Loans Holdings, which was previously controlled by Alchemy Partners Nominees.
STB has acquired Everyday Loans for £1 and has immediately provided funding so that EDL can redeem the remaining £34 million of subordinated debt principally held by Alchemy.
A payment of up to a maximum of £1.5 million will be made to the management team of EDL in March 2013, subject to achieving certain performance targets.
STB said the cash payments and the additional regulatory capital requirements arising from the enlarged STB balance sheet will be funded from its existing resources, as well as a capital injection of up to £5 million from parent firm Arbuthnot Banking Group in the form of a subordinated loan.
The subordinated loan is on the same terms as the existing STB subordinated loan from Arbuthnot.
Everyday Loans is a provider of unsecured loans to a customer base predominantly in lower income groups and operates through a national network of 25 offices where loans are originated, serviced and collected.
The business will continue to trade using the “Everyday Loans” brand.
Everyday Loans had a loan book of £63.9 million as at December 31, 2011, and generated underlying operating profits before tax of £4.6 million in 2011.
STB is providing EDL with a new loan facility of circa £37 million to refinance EDL’s existing bank debt and to fund future loans.
Paul Lynam, chief executive of Secure Trust Bank, said: “The acquisition of Everyday Loans represents a significant strategic development for Secure Trust Bank. We will be able to broaden our distribution channels and our routes to a wider market, with particular emphasis on direct and technology-based platforms and subsequently diversify and extend our lending portfolio.
“The strong synergies between Secure Trust Bank and Everyday Loans’ customer bases will also mean that opportunities to cross-market products will be open to both companies.”
Everyday Loans chief executive Terry Williams said: “We are delighted that we have concluded this deal with Secure Trust Bank. It creates a good opportunity for all of us and opens the path for Everyday Loans to benefit from the strong position we have built up over the last six years and expand the business – without being constrained by the wholesale funding markets. We can also see opportunities in the future where both companies will benefit from synergies between our customer bases and the plans to enhance the range of products that can be offered to these customers.”