Secure Trust reveals ‘limited appetite’ for commercial property lending

Secure Trust reveals 'limited appetite' for commercial property lending




Challenger Secure Trust Bank (STB) has confirmed that it has virtually no exposure to the commercial property market following last week's Financial Stability Report from the Bank of England.

Mark Carney, governor of the Bank of England, stated in his opening remarks that foreign capital flow into UK commercial property fell 50% during the first quarter of 2016, with share prices of property REITs (Real Estate Investment Trusts) plummeting after the referendum result was announced.

In a response to the report, the 64-year-old bank said it had long regarded commercial property lending as “potentially higher risk”, noting that it was governed by restrictive credit policies. 

“As a result, STB confirms that it has virtually no exposure to the commercial property market with the total lending balances outstanding amounting to a mere £31m as at 24th June 2016.”

On its website, STB’s real estate finance division states it can fund residential developments, commercial developments and pure and mixed developments. 

“This is spread across a number of counterparties and properties and, while classified as commercial lending, the majority is secured and risk assessed against residential property which incorporate small elements of commercial activity,” the report added.

With strong demand for its products in the SME lending market, the board at STB believes that it remains “well positioned” to navigate the uncertainties arising from Brexit. 

In April this year, STB launched in Scotland, where its first transaction provided finance for a multimillion-pound student accommodation development in Edinburgh. 

Last month, Arbuthnot Banking Group PLC completed the sale of six million shares in STB, representing approximately a 33% stake in the challenger bank. 

Following the completion, STB is looking at seeking a move to a premium listing on the main market of the London Stock Exchange.

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