International P2P Lending Volumes March 2020

The table lists the loan originations of p2p lending marketplaces for last month. Mintos* leads ahead of Zopa and Ratesetter*. The total volume for the reported marketplaces in the table adds up to 397 million Euro, down 40% to the previous month. I track the development of p2p lending volumes for many markets. Since I already have most of the data on file, I can publish statistics on the monthly loan originations for selected p2p lending platforms. This month I added Lenndy*.

Milestones achieved:

  • Mintos* crossed 5 billion EUR originated loan volume since inception

The effect of the current crisis is impacting nearly all marketplaces significantly in the second half of March. Read my previous article ‘Hunger for Liquidity – State of P2P Lending in Times of the Coronavirus‘ for further observations on this. To counter the effect the sinking volumes has on revenues of the marketplace company, Mintos* and Assetz Capital* announced the introduction of new fees for investors.

Investors living in national markets with no or limited selection of local p2p lending services can check this list of international investing on p2p lending services. Investors can also explore how to make use of current p2p lending cashback offers available. UK investors can compare IFISA rates.

p2p lending march 2020 statistic
Table: P2P Lending Volumes in March 2020. Source: own research

Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.

Links to the platforms listed in the table: Ablrate*, Archover*, Assetz Capital*, Bondora*, Bondster*, Bulkestate*, Colectual*, Credit.fr*, Crowdproperty*,  Dofinance*, Estateguru*, Fellow Finance*, Finansowo*, Finbee*, Folk2Folk*, Geldvoorelkaar*, Growly*, Investly*, Iuvo Group*, Kameo*, Klear*, Landlordinvest*, Linked Finance*, Lenndy* Look&Fin*, Mintos*, MyTrippleA*, Neofinance* , October*, Peerberry*, Proplend*, Ratesetter*, Rebuilding Society*, Savy*, Smartika*, Soisy*, Sourced*, Swaper*, TFGcrowd*, ThinCats*, Twino*, Viainvest*, Viventor*, Zopa*.

Notice to p2p lending services not listed: Continue reading

Hunger for Liquidity – State of P2P Lending in Times of the Coronavirus

Not only the stock markets, but also the p2p lending sector is heavily impacted by the current coronavirus situation. In this article I’ll try to give an overview of what’s currently the situation.

I watched the Mintos* live webinar on the current situation for the past 90 minutes. Some screenshots of the slides shown are at the end of this post. About 800-900 Mintos investors were watching and I think they highly appreciated the time and effort Mintos took to communicate. CEO Martins Sulte spent over 45 minutes answering questions. And there are a lot of questions investors have in times like these.

My take is, that the biggest trend we saw in p2p lending in the past week is the hunger for liquidity. Both on the investor side as on the loan originator side (on those marketplaces that work with loan originators).

105 German investors participated in a poll I ran over the past two days. Of these

  • 11% say they increase their p2p lending investment, to buy and profit from loans that are available at (large) discounts on secondary markets
  • 3% say they are increasing their p2p lending investment for other reasons
  • 30% reinvest as usual
  • 26% are withdrawing money as the want to reallocate it to the stock money
  • 20% are withdrawing money as they think the risk is too high

So even in this small, non-representative poll nearly half the investors are saying they are withdrawing money.

How that impacts the p2p lending marketplaces can be observed exemplarily on Mintos* :

  • loans on offer rose and still rise sharply both on the primary market (900,000 loans) and on the secondary market (1.7 million loans)
  • as many investors scramble to exit, this is only possible for them if they offer extreme discounts on the secondary market (the highest discount for current loans on offer is currently -20.1%, resulting in YTMs of 30% and higher for the buyer)
  • Congruously the Invest&Access product of Mintos got very illiquid. Withdrawals are very delayed and partial.
  • The volume of newly financed loans on the primary market has tanked
  • Interest rates offered on the primary market rise (current maximum 21.1%, Mintos even had to adapt the range the slider in the UI could show), together with cashbacks on offer and there are also measures to tie in capital longer.

In the current situation most investors in the discussion seem to assume that elevated risks come by the potential inability of borrowers to repay the loans, due to economic downturn. That may well be, but would impact the yield mid- or long-term (weeks or months).
In my view there are two very short-term risks that many investors overlook:

  1. The currency risks for many Mintos loan originators: Many have issued loans to borrowers in weak currencies like RUB, KZT or GEL, but need to pay Mintos investors in EUR. The sharp change in exchange rates could pose major problems for the liquidity of the loan originators.
  2. Many loan originators were growing fast and required constant cashflow to finance their lending and operations as they were not yet profitable. Some were even leveraged. External refinancing might be very hard to impossible to obtain in current market conditions (see for example investors reaction on trading of the Mogo Finance bond). And as said the volume financed on Mintos primary market is slowing. Again this could pose liquidity problems to originators.

An industry insider I spoke to said he would expect at least 2-3 loan originators to fail short term. CEO Sulte acknowledged in answering the questions on the webinar that “not all” could be expected to make it in the current situation, pointing to the large number of loan originators active on Mintos.

The two cited short term problems are especially a concern on those p2p lending market places that operate with loan originators. Of course the investors are also withdrawing increased amounts on “classic” p2p lending marketplaces like Assetz Capital, Bondora, Ratesetter and Zopa, but this poses no short-term risks to the stability of these marketplaces in my view.

Other investors share this opinion, pointing to the different levels of discounts on different secondary market (for current loans: Mintos* -20.1%, Viventor* -6%, Iuvo* -5.7%, Finbee* -5%, Savy* -5%, Neofinance* -5%, Bondora* -3%)

The platforms have reacted by four ways: communication, temporarily suspending borrower repayment requirement (especially SME loans, e.g. Linked Finance, October, Neofinance* ), and stepping up marketing and increasing interest rates:

  • Bondora* runs a raffle for investors which can win a BMW, minimum investment 1 EUR required.
  • Lendermarket* has increased interest rates from 12 to 14% and offers 2% cashback for any investment increase
  • Twino* has increased interest rates to 14%
  • Swaper* increased interest rates to 14% (16% for VIP customers, 5K minimum required)
  • Robocash* increased interest rates to 14%
  • Estateguru* interest rates have increased slightly

Below are screenshots of some of the slides shown in the Mintos webinar today:

mintos corona

mintos corona

mintos corona

mintos corona questions

Funding Circle Closes Offices in Berlin and Amsterdam

Funding Cirlce LogoFunding Circle today announced that it will close the offices in Amsterdam and Berlin laying off 125 employees. The German operations in future will focus purely on brokering loan request leads and will be managed from employees in London.

The announcement is not surprising as Funding Circle Germany failed to gain traction over the past years and struggled with default rates that exceeded expectations.

Funding Circle stock has gone down from over 440 pence at IPO to about 57 pence currently.

International P2P Lending Volumes February 2020

The table lists the loan originations of p2p lending marketplaces for last month. Mintos* leads ahead of Zopa and Ratesetter*. The total volume for the reported marketplaces in the table adds up to 660 million Euro. I track the development of p2p lending volumes for many markets. Since I already have most of the data on file, I can publish statistics on the monthly loan originations for selected p2p lending platforms. This month I added Bulkestate*.

Investors living in national markets with no or limited selection of local p2p lending services can check this list of international investing on p2p lending services. Investors can also explore how to make use of current p2p lending cashback offers available. UK investors can compare IFISA rates.

p2p lending statistic february 2020
Table: P2P Lending Volumes in February 2020. Source: own research

Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.

Links to the platforms listed in the table: Ablrate*, Archover*, Assetz Capital*, Bondora*, Bondster*, Bulkestate*, Colectual*, Credit.fr*, Crowdproperty*,  Dofinance*, Estateguru*, Fellow Finance*, Finansowo*, Finbee*, Folk2Folk*, Geldvoorelkaar*, Growly*, Grupeer*, Investly*, Iuvo Group*, Kameo*, Klear*, Landlordinvest*, Linked Finance*, Look&Fin*, Mintos*, MyTrippleA*, Neofinance* , October*, Peerberry*, Proplend*, Ratesetter*, Rebuilding Society*, Savy*, Smartika*, Soisy*, Sourced*, Swaper*, TFGcrowd*, ThinCats*, Twino*, Viainvest*, Viventor*, Zopa*.

Notice to p2p lending services not listed: Continue reading

LendingClub Announces Acquisition Of Radius Bank

Lending ClubLendingClub (NYSE:LC) announced that it has signed a definitive agreement to acquire Radius Bancorp, and its wholly owned subsidiary Radius Bank, (together “Radius”) valued at 185 million USD. LendingClub says Combining Radius and LendingClub will create a digitally native marketplace bank at scale with the power to deliver an integrated customer experience, enabling consumers to both pay less when borrowing and earn more when saving.

Radius is an online bank founded in 1987 and based in Boston, MA, with more than 1.4 billion USD in diversified assets. Its platform provides features such as check deposit, bill pay, card management, and a personal financial management dashboard, as well as open APIs to offer “banking-as-a-service” (BaaS) functionality to leading fintechs. In addition, the company offers commercial lending options for businesses, and treasury management services for pension funds, unions, municipalities, and non-profit organizations.

‘This is a transformational transaction that allows us to reimagine banking in a way that is free from legacy practices and systems and where the success of LendingClub is aligned with the success of our customers,’ said Scott Sanborn, CEO of LendingClub. ‘By combining with Radius, we will create a category-defining experience for our members that will dramatically enhance the resilience and earnings trajectory of our business.’

‘LendingClub has always been a fintech innovator, and I look forward to leveraging the strengths of both of our talented teams as we usher in a new era in banking,’ said Mike Butler, Radius’ President and CEO. ‘We are excited for our employees to operate our virtual banking platform with more resources and for our clients to gain access to an industry-leading lending product. This is a perfect marriage, with LendingClub bringing the leading digital asset generation platform, and Radius contributing a leading online deposit gathering platform, to position the combined company for long-term success.’

The combined entity expects to be substantially accretive with a cash payback of the purchase price premium and all costs in two years. The purchase price is subject to certain adjustments set forth in the definitive agreement, and the transaction is subject to regulatory approval and other customary closing conditions and is expected to close in the next twelve to fifteen months with benefits starting to materialize immediately after close.

Further, to facilitate compliance with federal banking regulations and prevent closing of the Radius acquisition being delayed or disrupted, the LendingClub Board of Directors has adopted a Temporary Bank Charter Protection Agreement, also known as a stockholder rights agreement, and approved a dividend distribution of one purchase right for each outstanding share of the Company’s stock as of March 19, 2020. The agreement is intended to deter stock positions in excess of certain thresholds set forth by the Federal Reserve under the Bank Holding Company Act. Specifically, it provides for the dilution of any person or group of persons who acquire:

(i) 25 percent or more equity interest in LendingClub or
(ii) 7.5 percent or more of any class of LendingClub’s voting securities. This threshold automatically increases to 10 percent as set forth in the agreement.

Anyone already above such thresholds is grandfathered in at their current levels. The agreement is effective immediately and will automatically expire on either the closing of the Radius acquisition or after 18 months, whichever is earlier.

International P2P Lending Volumes January 2020

The table lists the loan originations of p2p lending marketplaces for last month. Mintos* leads ahead of Zopa and Ratesetter*. The total volume for the reported marketplaces in the table adds up to 690 million Euro. I track the development of p2p lending volumes for many markets. Since I already have most of the data on file, I can publish statistics on the monthly loan originations for selected p2p lending platforms. I removed Boldyield as the platform has paused lending and repayed all investors (including accrued interest).

Milestones in cumulative volume lent crossed this month:

Investors living in national markets with no or limited selection of local p2p lending services can check this list of international investing on p2p lending services. Investors can also explore how to make use of current p2p lending cashback offers available. UK investors can compare IFISA rates.

p2p lending statistic january 2020
Table: P2P Lending Volumes in January 2020. Source: own research

Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.

Links to the platforms listed in the table: Ablrate*, Archover*, Assetz Capital*, Bondora*, Bondster*, Colectual*, Credit.fr*, Crowdproperty*,  Dofinance*, Estateguru*, Fellow Finance*, Finansowo*, Finbee*, Folk2Folk*, Geldvoorelkaar*, Growly*, Grupeer*, Investly*, Iuvo Group*, Kameo*, Klear*, Landlordinvest*, Linked Finance*, Look&Fin*, Mintos*, MyTrippleA*, Neofinance* , October*, Peerberry*, Proplend*, Ratesetter*, Rebuilding Society*, Savy*, Smartika*, Soisy*, Sourced*, Swaper*, TFGcrowd*, ThinCats*, Twino*, Viainvest*, Viventor*, Zopa*.

Notice to p2p lending services not listed: Continue reading