Month: August 2018

Up to 9% Interest Rate – How To Register as a Non-Resident Investor at Ratesetter Australia

wiseclerk 2 Comments

Ratesetter is the brand name of one of the top 3 UK p2p lending marketplaces. Unfortunately only UK investors can invest on Ratesetter UK, otherwise I would have tried it out.

Ratesetter is also the brandname of Ratesetter Australia. While not rund by the same company this Australian p2p lending marketplace uses the same technology base and is offering similar products, consumer loans of up to 5 years. Since launching in 2014 Ratesetter Australia has originated more than 325 million AUD in loan.

The site does not feature it, but actually Ratesetter is open to non-resident investors. I recently found this out and went ahead and opened I account in the past week. The signup process for non-residents is not as straightforward as on other marketplaces. I post a detailed description of how I did it below.

But why send money that far away?

Because rates are attractive. Interest rates are currently up to 9.3% (compare that to around 6% that is achieveable for 5 year investments on Ratesetter UK).
And that rate is AFTER fees.

Ratesetter Australia Returns

A further important feature is the provision fund. That is capital stored that is used to reimburse lenders of defaulted loans. While that is no insurance or guarantee, it is in my view a much stronger portection than the ‘buyback guarantee’ that some other market places promise.

There is currently 10.6 million AUD in the Ratesetter Australia provision fund. And since 2014 the provision fund has paid for every default without exception.

Ratesetter provision fund

Review of advantages

  • established platform
  • very high interest rates (displayed rates are after fees)
  • no default losses since 2014 for investors (due to the provision fund)
  • comprehensive statistics & loanbook download

Review of disadvantages

  • signup a little more effort than usual (see description below)
  • no secondary market. Investors investing in the secondary market should not expect to be in a situation were they might need that money earlier
  • 10% withholding Tax for German residents (for other countries check here – according to Ratesetter it is either 0% or 10% depending on country)
  • very volatile currency exchange rate
  • transaction fees for changing EUR -> AUD according to description below is 0.35%; to convert back AUD -> EUR the fee is 0.45%

My conclusion

Only investors that want to invest a larger amount for a long duration should consider this. Otherwise it is not worth the effort in my opinion.

Currency EUR AUD chart
Currency exchange rates EUR/AUD last five years (Source)

How I signed up as a a non-resident investor on Ratesetter Australia – step my step explanation

As the process is more effort than usual, I suggest you read the complete remainder of the article and decide if it is for you, instead of just diving into the registration process.

Step 1: Trigger Ratesetter registration process

Sign up via this link and the first 5 investors have a chance to get a cashback bonus of $75 AUD – see conditions below*

First there is a welcome page, click “Register Now” there and then this page is shown:

Ratesetter AUS Registration

Yes, you saw that right. After clicking Register, you STOP and do NOT proceed with the signup on the website as it can only handle Australian residents.

Step 2: Continue registration

After a few minutes I got an automated email asking me to complete my registration. I did NOT click on the link provided in the email, but rather send a reply email, stating that I am a German resident and would like to invest on Ratesetter and that I have an Australian bank account. I asked that they would please guide me through the process.

Step 3: Australian bank account

WTF? Sounds much more prohibiting than it actually is. I had a Transferwise account already and with a few clicks could open a free Transferwise borderless account in Australian dollar which comes complete with account number and BSB code (routing code). If you don’t have Transferwise you can open it for free, only plan a little time for verification.

The Australian Transferwise account later serves as reference bank account which is entered into the form in step 5.

Converting EUR in AUD costs 0.35% at Transferwise (how I saved that fees is written below). The current fee for later changing back AUD to EUR is 0.45%.

Step 4: Obtain scanned certified copies of documents for registration

While I waited for the answer from Ratesetter from Step 2, I went ahead and obtained scanned certified copies of documents. I could do that a the town hall (cost incurred 3.50 EUR). It will probably be different in other countries. Needed is
a) current driver licence OR current passport
b) proof of address no older then 60 days: utilities bill (such as an electricity bill or phone statement) OR bank statement or other bank correspondence OR correspondence from a local or central government department

Step 5:. Going on with registration

Meanwhile I got the reply from Ratesetter support. They are super helpful, but time zone difference means every back and forth takes a day. Ratesetter sent me a link of a web form to complete. I did that (entered ‘-‘ for SWIFT) and told them so via email, which I attached the requested certified document copies to.

Step 6: Registration is complete

One day later I got the confirmation that my registration was completed and I was ready to go.

Step 7: Deposit

One can now convert in the Transferwise account Euro to AUD wechseln and then send money from the Transferwise Australian currency account to Ratesetter. Ratesetter shows the necessary routing information under Transfer funds in > Transfer by Bank Transfer > Other

Saving in currency exchange when depositing

I could save the 0.35% Transferwise currency exchange fee for EUR > AUD by using a free Revolut account and exchanging between Monday and Friday EUR to AUD fee free. Then transfer the AUD either to the Transferwise AUD account or directly as a Ratesetter deposit payment.

I just started. I intend to lend for the 5 year market and experiment with setting my own desired rates slightly above market rate. Watch out for an update here on the blog after I have several month of experience or – probably more frequently on the dedicated thread on the German discussion forum.

*$75 AUD Cashback Bonus for the first 5 investors, that register thought the given link before 16.09.2018 and at least $2000 AUD  on the 3 or 5 year market. Precise terms and conditions on the Ratesetter site. To qualify I think swift action will be needed, given that the registration, deposit and lending will take some time.

Swiss Invoice Finance Marketplace Advanon Hit by Fraud Case

wiseclerk 2 Comments

Swiss invoice finance platform Advanon has to deal with a large fraud case. A client allegedly made up invoices for non-existing transactions and submitted forged invoices, bank records and emails. These invoices were then financed on the Advanon platform by 78 private investors. The fraud continued undiscovered for about a year racking up a total damage of 2.4 million CHF (approx 2.1M EUR).

2.4M CHF may not sound a very large absolute sum for a p2p lending company, but Advanon so far had financed invoices of only about 60M CHF in 2017, so the potential loss equals roughly 4% of the total yearly volume. And the exposure per investor is unusually high for a p2p lending marketplace as the affected investors could face a 30K CHF loss on average. Media speculation is that they might face a total loss. Advanon has about 3,000 registered investors, the majority from Switzerland with a few German investors. Advanon offers interest rates between 6-20%.

“We founded Advanon with the mission to help SMEs meet the ever-increasing payment deadlines and thus have a positive impact on the SME economy and its growth. It is frustrating and intolerable that this was being exploited by fraudsters with great criminal energy. We are mobilising all our efforts to fight for our investors and to recover the money they have invested.” Several lawyers and the entire management are working on the case. “We will adjust our strategic direction,” said Advanon CEO Lojacono. As a consequence, only institutional investors will soon be admitted to the platform. Advanon has always emphasized that investing in a high-risk asset class like factoring should only be considered as part of a diversified portfolio.

The case is now investigated by the public prosecution body.

Last November Advanon announced a pilot project for an invoice financing cooperation with insurance company AXA Wintherthur.

 

Lower Interest Rates on Mintos – How do Investors React?

wiseclerk 10 Comments

Compared to the beginning of July the interest rates for newly issued EUR loans on Mintos are much lower now. While investors enjoyed interest rates of up to 13-14% for loans issued in the first half of the year, typical rates are 8-11% now, with a 12-13% for more exotic loans mixed in.

Cause of the change in market condition was that Mogo, one of the larger loan originators on Mintos, issued a bond worth EUR 50 million, with an annual interest rate of 9.5% (ISIN XS1831877755) on June 25, 2018 and Mogo announced that starting from July 13, 2018, Mogo would partially repurchase loans from investors on Mintos using their call option as stipulated in the assignment agreement. During July, Mogo plans to gradually repurchase in total up to EUR 16 million net of loans issued to borrowers in Bulgaria, Estonia, Latvia, Lithuania, Poland, and Romania.

Following the repurchase, the interest rates for newly issued EUR loans were sharply lower not only for Mogo loans but also for loans of the other originators on the Mintos platform.

This left most investors with a lot of cash in their accounts, as commonly 1/3 to 2/3 of all the Mogo loans in their portfolios had been repurchased and their previously configured autoinvests did not match any loans any more at their set interest rates.

To find out how investors reacted to the situation P2P-Kredite.com conducted a survey among German speaking Mintos investors. Here are the preliminary results (48 respondents):

  • 35% say they withdraw uninvested cash and invest it on other p2p lending platforms
  • 21% say they continue to invest on Mintos primary market
  • 17% say they just wait, the interest rates will rise again
  • 15% say they withdraw uninvested cash and invest it in other asset classes (e.g stock)
  • 12% say they buy on the Mintos secondary market now, instead of using the primary market

For continental European investors looking for high yield alternatives here are 5 platforms that survey respondents liked:

  1. Bondora
    Bondora is a long established Estonian company offering consumer loans in Estonia, Finland and Spain. Investors can choose between their new “Go&Grow” product (up to 6.75% interest) or the self-select autoinvest options with individual loans yielding much higher (nominal) interest rates
  2. Estateguru
    Estateguru is a marketplace for property secured loans mostly in the baltic countries. Typical interest rates are 10-12%. Investors pick individual loans or enable autoinvest
  3. Grupeer
    Grupeer is a young Latvian platform gaining popularity among the German investors. They list business and development loans in several countries (e.g. Latvia, Russia, Belarus, Norway, Poland). Typical interest rates are 14-15%
  4. Peerberry
    Peerberry is a young Latvian platform listing consumer and property loans in several countries (e.g. Lithuania, Poland, Czech Republic, Ukraine). Typical interest rates are 11-13%
  5. Robocash
    Robocash is a Latvian platform listing consumer loans in Kazachstan and Spain. Typical interest rates are 14-14.5%.

This selection is based on the likings of German speaking investors that voted in August for best p2p lending platform in a P2P-Kredite.com survey:

Best p2p lending platforms by German investor survey
51 respondents, platforms that got no votes are not shown

The survey shows that Mintos is still rated number one in investor opinion among the queried audience, but the others are catching up (compared to similar surveys in the past).

My own Mintos portfolio shrank to less than 40% of its previous size as only  less than 1/3 of the Mogo loans I had in early July are still in my portfolio. I withdrew a lot of cash and have transfered it to other p2p lending market places. Of course I’ll hold on to the my remaining Mogo loans as nearly all of them are at 13-14% interest rate.

International P2P Lending Volumes July 2018

wiseclerk 1 Comment

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 listed in the table adds up to 449 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.

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 July 2018
Table: P2P Lending Volumes in July 2018. Source: own research

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

Notice to p2p lending services not listed: Continue reading →