Secure Trust Bank, the retail banking unit of Arbuthnot Banking Group, has agreed to sell its branch-based non-standard consumer lending arm Everyday Loans Holdings to Non-Standard Finance (NSF) for £127m.
Everyday Loans, which was acquired by Secure Trust in 2012, offers unsecured consumer credit.
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NSF will pay £107m of the deal amount in cash, while the remaining £20m will be paid in Non Standard Finance ordinary shares.
NSF will also repay £108m of intercompany debt following completion of the transaction, which is scheduled by the first quarter of 2016.
The deal will be funded through a £160m equity raise and £65m in bank debt.
Secure Trust Bank expects a post tax profit on the deal of not less than £115m, the bank said in a statement.
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By GlobalDataCommenting on the acquisition, NSF chairman John van Kuffeler said: "With the completion of this acquisition we will have operations in all of our current target sub-sectors. Everyday Loans is a leading branch-based non-bank lender in the UK and its guaranteed loans operations, whilst small, provide a platform for growth in that market.
"Everyday Loans is a strong and differentiated business for which we have exciting expansion plans. By applying our expertise and management skills we intend to grow its branch network; widen its customer base; and accelerate growth in its guaranteed loans business."
