UK bank slashes costs and sells assets as energy crisis deepens economic strain
Rising tensions in the Middle East have sent energy prices soaring, hitting UK businesses hard. Against this backdrop, Secure Trust Bank has announced major financial moves, including a £9 million asset sale and a cost-cutting drive to strengthen its position by 2026.
The bank's CEO, Ian Corfield, has warned that consumers are tightening spending as global instability grows, adding pressure to an already stagnant UK economy.
The conflict in Iran, which escalated in January 2024, has triggered sharp rises in global energy costs. Diesel prices climbed to their highest since April, while heating oil jumped from under €100 to €120 per 100 litres in days. Natural gas saw its biggest spike since August 2023, with the TTF benchmark up 25%. LNG prices in Europe and Asia have nearly doubled, and analysts warn of a 15% supply cut if disruptions continue. European gas storage levels, already low at around 20% in early March, have worsened concerns.
The UK economy showed no growth in January, even before the Iran conflict began. Businesses are now scrambling for stability as energy costs bite, with many scaling back operations. Secure Trust Bank has responded to the economic strain by selling its vehicle finance loan book to LCM Partners. The deal is expected to boost its CET1 ratio by 180 basis points and deliver a £9 million net gain. However, the bank has also set aside £21 million for an upcoming sector redress scheme, reflecting ongoing financial pressures. Under CEO Ian Corfield's 2026 overhaul plan, the bank aims to slash £25 million in costs by 2028—two years ahead of schedule. Despite this, its cost-to-income ratio is forecast to rise from 43.7% in 2025 to 47% in 2026. Corfield remains focused on lifting the bank's return on average tangible equity from 14.3% to 16% in the medium term.
The Middle East crisis continues to push up energy prices, squeezing UK businesses and consumers alike. Secure Trust Bank's cost-cutting measures and asset sale aim to shore up its finances, but economic uncertainty and rising operational expenses remain key challenges. The bank's performance in the coming years will depend on how well it navigates both global instability and its own restructuring plans.
