Secure Trust Bank PLC (LSE:STB) has announced plans to increase its provision for motor finance redress by approximately £16 million, raising the total to £21 million. This follows the release of a consultation paper from the Financial Conduct Authority (FCA), which proposes a redress scheme addressing historical motor finance commission arrangements.
The bank expects the proposed changes to reduce its Common Equity Tier 1 ratio by around 50 basis points to 12.8%, though it remains above regulatory capital requirements. STB has voiced concerns that the FCA’s method of determining unfairness is inconsistent with a recent Supreme Court ruling and intends to engage further with the regulator during the consultation process.
The company’s outlook reflects steady revenue trends but also pressure on profitability margins and cash flow. Technical signals suggest the potential for a trend reversal from a bearish phase, while valuation metrics indicate the stock remains undervalued and offers an attractive dividend yield.
About Secure Trust Bank PLC
Secure Trust Bank is a UK retail bank with a 72-year trading history, headquartered in Solihull, West Midlands. It operates through two main divisions: Business Finance (Real Estate Finance and Commercial Finance) and Consumer Finance (V12 Retail Finance). The bank is authorised by the Prudential Regulation Authority and regulated by both the Financial Conduct Authority and the Prudential Regulation Authority.
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