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Secure Trust Bank Sells Motor Finance Business for GBP619 Million

  //business-finance.news-articles.net/content/202 .. s-motor-finance-business-for-gbp619-million.html
  Published in Business and Finance on Sunday, December 28th 2025 at 3:34 GMT by reuters.com

Secure Trust Bank to Exit Motor Finance with £619 Million Sale – A Strategic Shift Amidst Regulatory Scrutiny

Secure Trust Bank PLC (STB), a UK-listed lender known primarily for its savings accounts and asset-based lending, has announced the sale of its motor finance business to DSG Agency Services Limited, a subsidiary of J Sainsbury plc (the supermarket chain), for £619 million. This significant deal, revealed on December 24th, marks a strategic shift for Secure Trust Bank as it navigates increasing regulatory pressure and seeks to streamline its operations. The sale is expected to complete in the second quarter of 2025, subject to regulatory approvals.

The Deal: Structure and Financial Implications

The agreement involves DSG Agency Services acquiring the entire motor finance portfolio and related assets from Secure Trust Bank's subsidiary, Secure Trust Motor Finance Limited. The £619 million price tag represents a premium over the book value of the business, reflecting its profitability and established market position. The proceeds will be used to return capital to shareholders through a combination of special dividends and share buybacks, bolstering investor returns.

According to the Reuters report, STB anticipates reporting a pre-tax profit of approximately £45 million for the year ending December 31st, 2023, with an underlying pretax profit of around £68 million. The sale is expected to significantly impact future profits; while the motor finance business contributed positively in the past, its disposal will reduce overall earnings. However, management argues that this reduction is offset by the potential for higher returns from other strategic investments and a simplified organizational structure.

Why Sell? Regulatory Pressure and Strategic Realignment

The decision to sell isn’t solely driven by financial considerations. Like many lenders operating in the UK, Secure Trust Bank has been facing increasing scrutiny from regulators regarding affordability assessments and responsible lending practices within the motor finance sector. The Financial Conduct Authority (FCA), the UK's financial regulator, launched a review of historic motor finance agreements earlier this year, focusing on whether firms adequately assessed customers’ ability to repay loans. This review could potentially lead to compensation claims if shortcomings are identified – a risk that has significantly impacted other lenders in the sector. A Reuters article from July 2023 highlights the FCA's investigation and its potential impact on motor finance providers (https://www.reuters.com/business/finance/fca-launches-review-motor-finance-agreements-2023-07-18/).

Secure Trust Bank’s CEO, David Brannan, acknowledged the regulatory environment as a contributing factor in the decision to sell. By divesting this business, STB reduces its exposure to the potential financial and reputational risks associated with the FCA review and any subsequent claims. This move demonstrates a proactive approach to managing risk within a complex regulatory landscape.

DSG Agency Services – A Strategic Fit for Sainsbury’s?

The acquisition by DSG Agency Services is itself noteworthy. DSG, previously known as Dixon's Carphone & Home Entertainment Group, operates retail financial services on behalf of J Sainsbury plc, primarily offering credit and insurance products to customers purchasing electronics and home appliances from Argos and Sainsbury’s Bank. This deal allows them to significantly expand their motor finance portfolio, broadening the range of financial products offered to consumers. The Reuters report suggests this acquisition aligns with Sainsbury's broader strategy of growing its financial services business.

While the link between a supermarket chain and motor finance might seem unusual, it underscores the trend towards diversified financial offerings. Argos, in particular, caters to a broad demographic, and offering motor finance could be a natural extension of their existing product range. The scale of DSG’s operations also provides them with the resources and expertise to navigate the regulatory challenges facing the sector.

Looking Ahead: Secure Trust Bank's Future Strategy

With the sale of its motor finance business concluded, Secure Trust Bank is focusing on strengthening its core businesses – savings accounts, asset-based lending (including invoice financing), and SME banking. The bank intends to invest in technology and innovation to enhance customer experience and operational efficiency within these areas. The capital generated from the sale will provide a financial cushion for these investments and allow STB to pursue opportunities that align with its long-term strategic goals.

The decision represents a clear shift away from consumer lending, which carries higher regulatory burdens and inherent risks. Secure Trust Bank's management believes this move will create a more resilient and sustainable business model, better positioned to deliver value to shareholders in the years ahead. While the immediate impact on earnings may be negative, the long-term benefits of reduced risk exposure and strategic focus are expected to outweigh these short-term challenges. The bank’s future success hinges on its ability to capitalize on opportunities within its remaining business segments and navigate the evolving financial landscape.

This sale signifies a broader trend in the UK's motor finance industry – a sector facing significant regulatory headwinds and undergoing consolidation as firms reassess their risk profiles and strategic priorities.