Secure Trust rules out Co-op Bank bid

Challenger bank Secure Trust has ruled itself out of the bidding for the Co-op Bank amid rising speculation about whether Britain’s biggest “ethical” bank has a future.

Secure Trust is on the up, with profits and dividends rising. Its strong capital base and entry into the main market of the stock exchange leaves it in a good position to do deals, said chief Paul Lynam.

“We have repositioned the business and have a huge amount of capital to grow,” he said. Lynam is looking at takeovers and is “particularly interested” in expanding its mortgage presence.

The Co-op Bank has been seeking a buyer since February to drag it out of a dire financial position. It has a £400 million bond to repay in September.

Lynam said: “Lots of people are having investment bankers coming to see them, suggesting it is a bargain. It has got less capital than it needs. It’s difficult to see a compelling economic case for buying it.”

He added: “It may be attractive to someone like Santander or Clydesdale. Otherwise, it is difficult to see how it survives.” Spanish lenders Sabadell and Santander are not expected to bid.

Secure Trust profits jumped 23% to £32.9 million. Last year it sold a subprime lending business it had bought for £1 for £235 million.

Its big shareholders include Invesco and Threadneedle, who are “keen for us to do something”, said Lynam.

He is readying for a tougher environment and has stopped writing unsecured personal loans.

Co-op bonds are tumbling on fears it may not survive. The Co-op has 1.4 million customers and insists that with refinancing it is a valuable entity.

Private and commercial bank Arbuthnot Latham boosted profits to £9.1 million from £6 million. Parent Arbuthnot Banking Group has an 18.6% stake in Secure Trust,