Secure Trust Bank to exit debt purchase sector

14th March 2022

Secure Trust Bank (STB’) has announced that it has decided to exit the debt purchase market.

STB subsidiary, Debt Managers (Services) (DMS’, has agreed to sell its portfolio of loans to debt purchaser, Intrum UK. The portfolio comprises around 650,000 customer loans acquired from third parties and STB.  Intrum will acquire the rights of DMS as lender to collect payments due under the loans within the portfolio. DMS will service the portfolio under transitional service arrangements until the customers are notified and the collection and servicing of their loans are migrated to Intrum and its systems. Following migration of the portfolio (which is expected to take up to 6 months from completion of the sale), under the Transfer of Undertakings (Protection of Employment) Regulations 2006 all of DMS’s staff are expected to transfer to Intrum. 

The cash purchase consideration for the Portfolio will be determined by the financial position of the portfolio as at completion, taking account of debt collections and of further debt purchases from STB by DMS to date, from 30th September 2021 (the reference date for the purchase price) to completion.

The gross value of the portfolio as of 30th September 2021 was £84.7 million and the value of the consideration for the Portfolio as at 30th September 2021 was £94 million. The actual forecasted cash consideration for the Portfolio is estimated at £79.7 million, if completion were on 31st May 2022. 

DMS has made a combined loss of £5.5m in the last two years.

STB says that the sale is in line with STB’s strategy to focus on specialist lending segments that have the strongest prospects for delivering sustainable and profitable medium to long-term growth. Following the sale, STB remains well positioned for growth, building on its strong foundations in its attractive, specialist lending markets. 

David McCreadie, Chief Executive Officer of Secure Trust Bank, said: “The sale is in line with STB’s strategy to simplify the Group and focus on businesses that have the strongest prospects for delivering sustainable and profitable medium to long-term growth as outlined at our Capital Markets Day in November 2021.  Within these businesses, our key priority is to help more customers, extend our product offerings and further enhance our digital capabilities. The estimated net benefit and capital released in FY2022 from this sale will facilitate swifter progress in these areas.”

“I would like to thank all our colleagues in DMS in advance for their continued support of our customers as loans are transferred to Intrum. We consider that Intrum has an approach, policies and controls designed to ensure that these customers will continue to be treated fairly.”

Eddie Nott, Intrum’s Managing Director for the UK and Ireland said “We are delighted that Secure Trust Bank sees Intrum as the right custodian for its  DMS portfolio.”

“DMS  has provided an essential service in supporting customers through the pandemic and we look forward to continuing this work with our focus on ethical treatment and excellent customer service.”

Intrum says that the transaction is aligned to its UK’s strategic objective of effective capital deployment alongside capital-light arrears servicing, allowing financial institutions to leverage the platform sophistication and market-leading customer service credentials of the business.