CHALLENGER bank Shawbrook has booked an impairment charge of £9 million after it emerged that its asset finance division had underwritten a number of loans that did not meet the business's strict lending criteria.
The impairment charge, on lending facilities of £14.7m, will be set aside to cover any losses and possible defaults on these loans.
As it posted an unscheduled trading update, the FTSE 250 bank announced that it had accepted the resignation of chief financial officer Tom Wood. Dylan Minto, currently director of strategy, will step in as interim CFO.
The “irregularities” were identified by the group's recently upgraded risk management systems and controls.
After what it called a thorough investigation, Shawbrook said it was confident that these upgraded systems would prevent the recurrence of such irregularities in the future.
Steve Pateman, CEO, commented: "While this is extremely disappointing, the irregularities were identified by the upgraded risk management systems and controls we implemented earlier this year. They have been investigated thoroughly and appropriate action has been taken.”
He added: "Whilst the additional impairment charge arising from these irregularities will impact pre-tax profit for the year, performance is otherwise in line with our expectations.”
Shares in Shawbrook have lost more than half their value since close on Thursday, closing last night at 140p.
The bank is a specialist lender to small and medium-sized enterprises.
Trading was in line with previous guidance with loan originations in the second quarter of the year flat on the previous quarter and up 35 per cent year-on-year.
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