Secure Trust Bank has ceased offering unsecured consumer lending under its Moneyway brand in concerns over ‘aggressive’ pricing by banks.
The British challenger bank told Leasing Life that it was concerned about ‘increasingly aggressive competitive practices,’ with lenders offering ever-cheaper loans to compete for customers at a time of economic uncertainty. The unsecured personal loans were offered under Secure Trust Bank's Moneyway brand.
Paul Lynam, chief executive of Secure Trust Bank, told Leasing Life: “An ever growing number of lenders, striving for new business volumes, are exerting downward pressure on lending margins and credit underwriting standards.
“This cohort of lending is particularly exposed to credit losses in scenarios where GDP growth slows, household debt continues to rise, disposal incomes get squeezed, interest rates increase, and unemployment levels rise. Several of these scenarios are now being forecast by the Bank of England amongst others.”
Lynam told Leasing Life that existing unsecured personal loans would run their course, and stressed that they “remain highly committed” to their retail finance business, noting that it carried different credit risk dynamics.
He said that Secure Trust Bank would return to the unsecured consumer lending market once it became more sustainable, and stated they would “continue to invest heavily for future growth” in other areas, such as their SME businesses.