© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
July 23, 2014 12:22 am
Secure Trust Bank, the retail banking arm of Arbuthnot Banking Group, is planning to launch an invoice financing business this quarter, underlining the rise of challenger banks that are stepping in where the larger banks retreat.
Paul Lynam, chief executive officer at Secure Trust Bank, said: “We will provide invoice discounting and factoring services to companies that want to use their working capital more effectively.”
The UK banking sector is rebalancing as larger banks deleverage and grapple with regulatory issues. Some of the spare capacity is being taken up by challenger banks, which have strong balance sheets, access to funding and no constraints caused by exposure to legacy issues.
Last year Arbuthnot announced plans to break into the small and medium-sized enterprise lending market to take advantage of big banks’ reluctance to lend to small businesses. The new invoice financing business is an extension of this and Secure Trust Bank hired John Bevan, the former head of Barclays trade and working capital UK and Ireland, to lead the push.
Mr Lynam said: “The big banks are very slow to make decisions and aren’t serving their customers well [ . . .] We’re free of headwinds and legacy conduct distractions. We can focus on servicing our customers well and servicing the customers of big banks quickly.”
Earlier this month, Arbuthnot raised £75m of new capital, which will help fund this.
On Tuesday Arbuthnot reported a half yearly profit before tax of £9.5m for the six months to June 30, compared with £2m in the same period last year.
Customer loans made by Secure Trust Bank grew from £366m the previous year to £448m, while customer loans made by private bank Arbuthnot Latham grew from £307m to £394m during the period.
For the first time the group has exceeded £1bn in customer deposits, the bank said.
Secure Trust Bank’s expansion illustrates the growth potential of the challenger banks sector, which is taking on the four dominant names in UK retail and business banking: Lloyds Banking Group, Royal Bank of Scotland, Barclays and HSBC.
There are a number of regulatory challenges facing the banking sector, including the Serious Fraud Office’s criminal investigation into allegations of price rigging in the foreign exchange market.
In a further challenge for the future of the UK’s largest banks, last week the Competition and Markets Authority announced their intention to conduct a wide-ranging probe into retail and small business banking, where new entrants still faced “significant” barriers and there is a lack of transparency and complex charging structures for consumers and small businesses, the competition authorities said.
Please don't cut articles from FT.com and redistribute by email or post to the web.