A West Midlands bank with no exposure to wholesale money markets has raised £25 million by listing on the London Stock Exchange.
Solihull-based Secure Trust Bank has been valued at £102 million after floating on the Alternative Investment Market at £7.20 a share.
Against a backdrop of a European financial crisis and fears of another recession, you could be forgiven for thinking it is a bad time for a bank to float – indeed the planned flotation of Santander’s UK arm is set to be put back to at least 2013 because of uncertainty.
But Paul Lynam, chief executive of Secure Trust Bank, said it was a time of great opportunity for the bank with no toxic debt to expand while larger competitors struggle against the eurozone and the Independent Commission on Banking recommendations.
He said: “We have chosen the timing specifically because it is a good time for us. Many of the larger organisations are facing significant headwinds.
“Already Santander UK has postponed its planned flotation for at least two years. Large organisations are being caught in these headwinds but we aren’t because we have a very strong balance sheet and a simple, straightforward approach to customers.
“And by raising capital it will make it easier for us to continue to grow and create jobs in the West Midlands.”
About a quarter of the equity has been floated, with the remaining 75.5 per cent stake retained by banking group Arbuthnot.
Mr Lynam said over the last 12 months Secure Trust has increased its lending balances by 99 per cent, customer numbers by 44 per cent and underlying pre-tax profit by 75 per cent.
The growth has already benefited the region’s economy – with almost 50 new employees recruited in the West Midlands in the past year, taking the total workforce to about 260.
The retail bank lends in motor finance, retail point of sale and personal unsecured lending. Its half-year pre-tax profits this year were £5 million.
Mr Lynam added: “If you look at what is going on with the big banks, they have got serious challenges, not least what is going on with the eurozone and the Independent Commission on Banking recommendations.
“They have these challenges and we don’t really face any of them, so we are able to focus on growing the business and look to the future. We are a slightly unusual bank in that we have no exposure to wholesale lending."