Niche retail bank Secure Trust prices AIM debut

Arbuthnot Banking Group defied the odds today by coming a step closer to floating its subsidiary, Secure Trust Bank, when it announced a price for the shares.

Despite turbulent markets and investor jitters over the banking sector, Secure Trust’s AIM listing looks set for 2 November. It will be priced at 720p per share, valuing the niche UK retail bank at £102 million.

Arbuthnot, which is already AIM-listed, is selling a stake of just under 25% in Secure Trust, and expects to raise a total of £25m, which will fall to £9.8m after costs.

The bank specialises in motor finance, retail point of sale finance and personal unsecured lending. Its capital is raised from customer deposits, including instant access, longer term deposits, fee based current accounts, and a household budgeting product called OneBill.

Secure Trust said it would use the proceeds to make acquisitions of other loan books and expand its own lending. The company made profit before tax in the first half of this year of £5m, down from £9.6m in the second half of 2010.

Arbuthnot is trading at 280p, near its 52 week low of 275p, and down 5p from yesterday’s close of 285p.

By early afternoon, Barclays was down 6.4% to 150p, joining Royal Bank of Scotland and Lloyds Banking Group on the leader board of fastest falling FTSE 100 stocks. Insurers Aviva, Admiral Group and Prudential sustained big falls, with Aviva down 3.3% to 363p.

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