Vanquis Banking Group (VANQ) Status Update summary

Capital optimization and transaction overview

• Issued GBP 60 million of Additional Tier 1 (AT1) capital securities at a 10.875% coupon with a 5.5-year call window, convertible to equity if CET1 falls below 7.0%, and listed on the International Securities Market of the London Stock Exchange.

• Tendered GBP 58.5 million of Tier 2 capital, reducing outstanding Tier 2 to GBP 141.5 million and aligning with the strategy to replace ineligible Tier 2 capital and enhance Tier 1 efficiency.

• Net annualized cost increase of GBP 1.4 million, but annual interest expense reduced by GBP 5.19 million and GBP 60 million more capital is now available for lending.

• AT1 issuance provides significant headroom above regulatory requirements, supporting growth and liquidity, with CET1 capital released for general corporate purposes.

• AT1 Notes settlement expected on 1 October 2025, with semi-annual coupon payments starting 1 November 2025; Tier 2 tender offer settlement expected on 2 October 2025.

Capital benefits and composition

• Total capital ratio remains at 29.2%, with Tier 1 ratio increasing from 18.5% to 21.7%.

• Pro-forma surplus Tier 1 capital increases from GBP 96 million to GBP 156 million as of June 2025.

• CET1 capital surplus stands at 7.3% (GBP 137 million) post-transaction, with CET1 ratio of 18.5% becoming the binding constraint.

• Pro-forma Tier 1 capital is GBP 408 million, total regulatory capital is GBP 550 million, and CET1 capital is GBP 348 million as of June 2025.

• CET1 requirement is 11.2% of RWAs, Tier 1 requirement is 13.4%, and total capital requirement is 16.4%.

Growth strategy and product performance

• Achieved two consecutive quarters of profitability and three quarters of balance growth as of June 2025.

• Gross customer interest-earning balances nearly GBP 2.5 billion at June 2025, targeting above GBP 2.6 billion by December 2025 and circa GBP 3 billion by December 2026.

• Strong growth in second-charge mortgages (over GBP 150 million in H1 2025) and 6% growth in credit cards in Q2 2025.

• Vehicle finance growth moderated pending new technology platform, with future growth expected post-implementation.

• Capital optimization provides short-term boost to growth capacity, freeing up CET1 for further lending.