UK challenger bank Shawbrook swings to profit

Shawbrook, one of the UK’s new challenger retail banks, has turned a maiden pre-tax profit as it gears up for a stock market listing next year.

The company, which targets loans to small and medium sized businesses, increased total lending from £1bn to £1.4bn last year. It has also announced the acquisition of another lender Centric Commercial Finance as part of an attempt to almost double the assets it controls in 2014.

Shawbrook was formed in 2011 by the merger of three smaller lenders, and has since acquired two businesses including Centric. Last year it made a pre-tax profit of £16.8m, after a loss of £7.1m in 2012.

Richard Pyman, the bank’s chief executive, said Shawbrook had benefited from small businesses becoming disillusioned with their lenders. “A lot of UK-based SMEs find the large clearing banks unapproachable. They are often heavily model and computer driven, we want to be approachable and human,” he said.

Shawbrook plans to raise assets from around £1.7bn to £3bn this year as its private equity owners prepare to float it.

The bank is partly owned by Royal Bank of Scotland’s Special Opportunities Fund, which the state-owned bank is selling off. “It’s common knowledge that we are in private equity hands, it’s reasonable to assume there’ll be an exit,” Mr Pyman said. “It’s unlikely to be 2014, it’s much more likely to be 2015.”