Published September 22, 2017
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Challenger bank Paragon has shaken up its management and restructured itself to accelerate its push into mainstream banking services, including car, business and development finance.
Paragon Group started life in 1985 as a specialist buy-to-let mortgage lender but has shifted into a broader range of financial services in recent years, including launching a retail bank three years ago.
Today the FTSE 250 group told investors the previously separate corporate entities would be combined into a single company and renamed Paragon Banking Group, reflecting its aim to become a “self-sustaining and consistently profitable” bank.
Previously Paragon Bank - which offers online banking services and delivered a maiden profit of £11.6m last year - relied on financing from its parent mortgage lending company.
As part of the shake-up the group will have a single combined and enlarged board, with four new non-executive directors joining, while former Paragon Bank chairman Stephen Blaney will leave the business.
Nigel Terrington, chief executive of Paragon Group, said the aim was to become a “more balanced” business over time, splitting its focus between buy-to-let lending and its other financial services.
“I want the other areas to grow and for us to have a more diversified business,” he said.
Other financial products being prioritised include asset finance and second mortgage lending.
Mr Terrington insisted the moves were about “diversification” of funding streams away from its historic reliance on securitisation to growing retail deposits and did not reflect a negative outlook on the troubled buy-to-let market.
Buy-to-let mortgages are becoming a smaller part of Paragon’s overall business but still account for 85pc of its balance sheet and 65pc of profits.
Mr Terrington said recent regulatory tightening in buy-to-let could present a “growth opportunity” for specialist lenders such as Paragon to pick up share while the overall market shrinks.
The group has £12.9bn of loan assets under management.
Non-exec directors joining the enlarged board include Patrick Newberry and Finlay Williamson - both formerly of Paragon Bank - and Barbara Ridpath and Graeme Yorston.
Paragon's share price was up just over 1pc to £4.13 in early afternoon trading.
Re-disseminated by The Asian Banker from The Telegraph