Two Issues Currently Evolving on P2P Lending Marketplaces

This week some investors on the p2p lending marketplaces Viventor, Grupeer and Mintos are affected by issues that hinder the normal procedures on these marketplaces.

Viventor started to display the following warning message yesterday (visible only if you click on an affected loan)

Aforti Viventor
(Screenshot from Viventor.com)

As a result, multiple Aforti loans were on offer on the secondary market for 5 to 15% discount (at one point in time I saw 35% discount)

Asked for a comment, Viventor CEO Andrius Bolsaitis told P2P-Banking.com:

According to information that we have now, they have some cash management issues, we are in discussions with them and hope to resolve the situation soon. I will be personally meeting with their managers tomorrow in Warsaw and will have more updates then.

Update 14:02: Apparently Mintos has now suspended trading of Aforti loans on the secondary market. I reached out this morning to Mintos’ management for a comment on how they see the situation with Aforti.

Update 14:42: Reply from Mintos CEO:

Hi … ,

Thank you for your email.Aforti is overdue on passing to Mintos payments which Aforti has received from borrowers and payment for buybacks. Thus, we are suspending repayments and buybacks. We are meeting Aforti tomorrow in Warsaw and will update investors accordingly. Below excerpt from communication to all investors:
Mintos has suspended automatic repayments and buybacks for loans originated by Aforti Finance on our marketplace (EUR and PLN).
The decision was made based on Aforti Finance’s overdue transfers of borrower’s payments to the Mintos marketplace.

In order to protect the interests of our investors, all loans issued by Aforti Finance have been removed from the primary and secondary markets of the Mintos marketplace. This means you cannot buy or sell Aforti Finance loans, effective immediately until further notice.

Update 16:02: Statement from Aforti Holding:

Dear Sir,

In response to the questions regarding the message released by Viventor, we would like to inform you following.

We are currently at the stage of closing cooperation with the Viventor platform, what has been announced to Viventor. Situation suggested by Viventor is a result  of  change in Aforti Finance S.A business strategy. Our decision is determined by technical difficulties in cooperation with  Viventor platform. Also cause most workload has to be done manually, our operational risk increased significantly. This is what we want to avoid, cause AFORTI business model and operational procedures are going rather in the direction of using API to automatize processes and to minimize human errors.

It’s also worth to add, that we have not been using  Viventor platform for new loans for about two last months, as a result of mentioned above decision. Of course Viventor receives daily financial transfers, so we do not see any reason for such a message.

Due to the fact that for tomorrow (Thursday, August the 8th ) we have scheduled a meeting with the Viventor, we believe all misunderstandings will be clarified.

Update Aug. 8th: the meetings are at 12:00/13:00 (Warsaw time)

Update Aug. 8th: Debitum Network says investors on the Debitum platform are not affected as all Aforti loans were bought back on July 25th

Update Aug 9th: from Mintos

Update Aug 9th: by Viventor

As previously announced the meeting with Aforti took place in Warsaw. The parties found a solution with regard to the technical issues. We consider the solution satisfactory for both sides and expect all issues to be resolved during next week.

Update Aug. 12th: Mintos now says they had an agreement with Aforti since January 2019, due to which Aforti would not place any new loans on the primary market. Strangely they only communicate that agreement now. Why not in January?

Our team is once again meeting with Aforti Finance in Warsaw, Poland today to continue to work out the details of last week’s initiated solution for Aforti Finance to resume transferring borrower repayments to us for distribution among investors.

We aim to release the next more detailed update tomorrow.

Until then we thank you for your patience, as well as the questions to our Investors Service team and comments on the blog and social media. We are preparing to release answers to them as soon as we handle the current priority of resuming payments.

We also wish to remind that Aforti Finance has not been placing loans on the Mintos primary market since January 2019. It was a mutual agreement with Aforti Finance following a weaker than expected loan performance and IT system related issues. Aforti Finance has continued servicing the loans since then and the total Aforti outstanding loan portfolio on the Mintos marketplace has decreased from EUR 5.7 million on December 31, 2018 to current EUR 2.2 million as of August 12, 2019. In light of adverse changes in the mood on the Polish securitization and bond market as well as our due diligence insights on the company’s internal arrangements changes, we reflected our risk precautions by downgrading Aforti to C+ in March 2019.

At this stage we remain committed to working with Aforti Finance to continue servicing loans and passing borrower repayments to investors on the Mintos marketplace as soon as possible.

Update Aug. 12th: I have analysed the Mintos loan data and came to the result that the last Aforti loan, was listed on January 2nd on the Mintos primary market.

Update Aug. 13th: Several investors report that they received a repayment incl. late fees on this Aforti loan on Viventor today.

Update Aug. 14th: Mintos has announced that Aforti payments have resumed as of today. Aforti loans on the secondary market stay suspended.

 


Earlier this week on Monday, it became evident that the Lithuanian central bank had suspended the operations of Satchelpay (source), which Grupeer used as one of two ways for deposits by investors. From Tuesday onwards Grupeer asked investors to use the alternate deposit method via Baltic international bank only and said that they will add new payment providers this week.

Asked by P2P-Banking what the status of investor payments is, that were made shortly before or on the day of suspension to Satchelpay, a Grupeer contact told P2P-Banking:

At the moment we are in contact with the bank and have received the information that all transferred funds will be returned to the account of the sender. However, we cannot provide you with the exact terms.
More detailed information will follow.

Hopefully both incidents will be resolved satisfactorily for investors. On both issues I see room for improvement on communications with investors.

International P2P Lending Volumes July 2019

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 611 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 stats July 2019
Table: P2P Lending Volumes in June 2019. 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

International P2P Lending Volumes June 2019

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 613 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.

Milestones achieved this month (total volume since launch):

  • Archover crossed 100M GBP
  • Credit.fr crossed 50M EUR

Arboribus is listed for the last time, as the platform will cease to originate new loans.

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 june 2019
Table: P2P Lending Volumes in June 2019. 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

LHV Bank Integrates Estateguru Investments in Online Banking Dashboard

Who? What? You might wonder why that is relevant as most readers are unlikely to be LHV Bank customers. LHV Bank is a bank in Estonia.

I think it is highly interesting, as it is – to my knowledge – the first time a bank has integrated p2p lending investments in its customer interface. So the LHV bank customers, not only see their accounts and stock depots, but also their Estateguru investments conveniently listed in their online bank dashboard. Much has been talked about what role could banks have in p2p lending (mere transaction banks? providing credit lines?) and also there is a lot of speculation if PSD2 (open banking) will help fintechs to seize the access to the customer from banks because they could control the user interface in the future. But this is actually a first step a bank takes in the opposite direction. By aggregating “non-bank” information inside the dashboard, they aim to make the banking interface more useful for the customers.

estateguru lhv
(Source: Estateguru)

Press release:

LHV customers can now see their short term property loan investments on LHV internet bank. On the summary view of internet bank, besides public stock exchange investments, one can see also alternative investments like short term property loan investments and cryptocurrencies, thus making it possible to get a quick and comprehensive overview of one’s investment portfolio. EstateGuru and Coinbase are the very first services to be switched on to the platform.

“LHV’s new service is the best example of cooperation between banks and fintech. LHV is most definitely a trendsetter in the banking sector. It is fulfilling to see that short term property lending has become a solid part of investments, and traditional banking has accepted it. EstateGuru has more than 25 000 investors throughout Europe, and the number is rapidly growing among both retail, professional, and institutional investors. We can provide our customers with more added value via interfaces like that of LHV’s  “, commented EstateGuru’s COO Mihkel Stamm.

Alternative investments have become a substantial part of the Estonian investment scene, particularly among new investors. There are more than 13 000 people in Estonia who have invested in crowdfunding platforms. The fixed rate of return on debt instruments and access to the new and attractive asset classes have found their well-deserved place in investors’ portfolios. The better the quality of information, the more successful the investors.

“LHV aims to keep pace with its customers’ investment activities and that’s why we decided to take a step closer to the universe of alternative investments. The added value of this new service for our customer is a better and more comprehensive overview of the assets, thus making the portfolio management more successful “, added the Head of Investment Services at LHV, Martin Mets.

About EstateGuru

EstateGuru is the leading European platform connecting an international community of investors and businesses offering the highest diversification options for investors and flexible terms and speed of funding for businesses. The mission of EstateGuru is to provide hassle-free and flexible financing to property developers and entrepreneurs as well as diversified property backed cross-border investment opportunities to its international investor base—from the small individual investors to the institutions and everyone in-between. EstateGuru has more than 25 000 investors from 45 countries and the total money lent to date is more than 122MEUR. …

About LHV

LHV is the largest domestic financial group in Estonia. LHV’s mission is to help to create Estonian capital. According to LHV’s vision, the people and enterprises of Estonia dare to think big, start things and invest in the future. LHV’s values are to be simple, supportive and effective.

Impressions from the P2P Conference in Riga

On Friday and Saturday I attended the P2P Conference in Riga. It was the first p2p lending conference in Riga and I was very impressed how well organized it was for a new event. Kudos to the Targetcircle staff who organized that. The audience was platforms, retail investors and bloggers/youtubers mainly from the Baltics and Germany but also sprinkled in from other countries all over Europe. I would estimate about 350 to 400 people in total.

Platforms presenting and attending were nearly exclusively from Eastern Europe (mainly the Baltics). Most of the retail investors came for the chance to meet and speak to the platform representatives in person.

p2p conference riga 2019

The organizer of the conference is Norwegian affiliate technology company Targetcircle. Targetcircle was founded in 2014. I became aware of them when Mintos switched their affiliate tracking from an inhouse solution to their system around November 2016. Since then they won a wide variety of Eastern European p2p lending platforms as clients for the affiliate tracking solution, but also recently the Irish platform Flender. Targetcircle concentrates on the underlying technology as a marketing solution for fintechs but also as a (whitelabel) technology for other affiliate networks. The CEO told me he aims next to win more clients for his solutions in the UK and Spanish market and then later on in East Asia.

The conference started with a day of presentation, demos and time to visit the exhibiting platforms at their booth. There was ample time for networking with good catering (outside barbecue with DJ music). A recorded livestream video of the main stage activity is available here.

The main news announcement on the conference was Mintos unveiling the new Mintos Invest and Access offer. See this article I wrote about Invest & Access.

I really enjoyed the opportunity to talk to so many platform representatives, other bloggers and hear the opinion of many retail investors from recently started to 10+ years investing into peer to peer lending. In general the investor crowd was optimitic about the future prospects of investing into p2p lending and we all exchanged experiences, opinions and tipps on strategies, selecting platforms and evaluating risks.

p2p conference riga 2019

The atmosphere was very relaxed and informal and it moved to a vacation feeling when on Saturday the venue was located on a beach at a lake.

p2p conference riga 2019

Attendees spent most of the time chatting and networking, but some more venturous ones took up the offer to try wakeboarding or stand up paddling or got active playing volleyball or boule.

Targetcircle plans to do the conference again next year and I am looking forward to going again.

New product: Mintos Invest and Access – What it is and My Opinion

Mintos will launch a new product offer called Invest & Access tomorrow. It was already unveiled and presented at the P2P Conference in Riga on Friday. Before I write about it watch the video below for about 10 minutes with Mintos CEO Martins Sulte explaining Mintos Invest and Access.

invest and access presentation riga
the video should autostart at the right point. If not it is at 2:29:22

The new offer makes it super-easy for investors to invest and automatically diversify through a very wide selection of loans. Mintos does that by investing the money in all loans on the platform that carry a buyback guarantee and are from originators that are at least 6 months on the platform. Mintos promises that investors will be able to cash out easily (subject to market demand) instantly, saying investors don’t need to bother about handling the loan selling on the seondary market. Mintos does that by selling the non-late loans to other investors.

The investor can still see how the portfolio he holds is composed on an overview page. One important aspect for the market dynamics on Mintos marketplace is that Invest & Access will invest before the autoinvests.

Mintos is cleary aiming to make it easy for new investors that don’t want to spend much time thinking about the investment and optmizing yields by giving them the average yield by just one click. The Invest & Acesss page will show the weighted average interest rate, which at the time I saw that page was showed as 11.98%. But the figure will change and update as market conditions fluctate and as the FAQ says it is not guaranteed.

One important point in the FAQ/footnotes is that the ‘instant access’ only applies to current loans. That means if the investors has e.g. 15% late loans, that would mean that he gets only 85% as instant withdrawal and for the remaining 15% has to wait until either the loan is bought back by the buyback or becomes current again (I suppose in that case the investor could trigger another cashout).

Investors can runs both Mintos Invest & Access as well as the existing autoinvests, should they which, but in that case Invest & Access would use any available cash the investor has first, therefore I would guess that there are rarely any funds left for the autoinvests to use.

My Opinion on Mintos Invest and Access

Mintos clearly offers a product that makes it as easy as possible, lowering the entry hurdles especially for new investors. And as Bondora Go&Grow shows there is a high demand by investors for simplified products. Statistics published by Bondora show that in April 2019 63% of the new investments in that month where conducted via the Go&Grow product, which is constantly gaining over the other investment methods Bondora offers. Other examples are the Access products offered by British Assetz Capital.

Looking at it from the perspective of an investor that is a little more experienced and willing to spend a little time Invest & Access does not seem an attractive offer. By definition it offers the weighted average interest rate.

By setting up own autoinvests at Mintos, keeping a good diversification and foregoing the highest risk, investors can currently achieve about 13-14% yield on Mintos. So if they would instead use the new product they would have about 2-3% lower yield, and have actually less control on which originators they invest in. An important point to consider, is that the value Mintos shows you, is the average interest rate, NOT the expected average yield. The yield will be significantly lower than the interest rate as Mintos will include buyback loans from originators with long grace periods or originators that do not pay interest income on delayed payment. Excatly those are typically avoided when investors configure their own autoinvests.

And concerning the argument of liquidity. Mintos is very liquid anyway. Without using the new product it is no problem to liquidate a portfolio within a few minutes to  a few hours it just depends on the price. Sure you might have to offer a discount. Maybe depending 0.2%-0.6% on average. But that is a small price if you had the higher yields before.

So would I recommend using Invest & Access over the ‘traditional’ way of setting up own autoinvest? There is one use-case I would. If an investor wants to invest very short-time (for whatever reason ‘parking’ money) for less than say 120 days, than it is worth considering.

In my opinion on why Mintos launched the new product, there are actually two reasons:

  1. there is demand for a simplified product and this new product shall satisfy that
  2. the new product will help on the sales site for attracting and onboarding new orignators. Originators that can only offer rates that are below the average interest rate on the Mintos platform so far were hard to sell. With Invest & Access they will be just part of the bundle and automatically sold (once the originator has been on the platform 6 month)

That brings us to an interesting point. How will Mintos Invest & Access the market dynamics? The big factor here is that Mintos Invest & Access happens BEFORE autoinvest and manual investment. There are already (even before launch) speculations and fears of investors that it might bring down interest rates or ‘force’ them to use the new product to avoid cash drag, but I think it is much to early to make any prediction what might be the outcome. But I sure am curious what this will do to the activity on the Mintos marketplace.

What are your opinions on the new product? Please share them in the comments. Thx.

mintos invest and access

P.S.: The following interview with the Mintos CEO was recorded just before the announcement of the new product, therefore it does not cover Invest and Access – but it has a lot of information on the current state of Mintos.

(Source: Bernhard Hummel)

Estateguru Raises 1.3M EUR from Speedinvest

Baltic property p2p lending marketplace Estateguru announced, that it has raised a 1.3M EUR round led by Speedinvest f. Speedinvest f is a focus fund launched by Speedinvest, targeting Fintech investments across Europe. Speedinvest will support EstateGuru in its geographic expansion across Europe.

Marek Pärtel, founder and CEO of EstateGuru, outlines the company’s mission to become the largest pan-European real estate financing marketplace: ‘Today, EstateGuru has become the largest platform in mainland Europe, showing an average annual growth rate of 100%. Simultaneously, we have discovered excellent opportunities to further increase our market coverage and it is for this purpose that we have drafted a clear technological development plan that requires a strong partner in order to be implemented successfully.’

Christopher Zemina, Investment Manager at Speedinvest, explains the background of the investment: ‘EstateGuru is the story of a small team that has achieved extraordinary growth without much external funding. The team has executed their plans and constantly outperformed our expectations. We are determined to support the company in its next stage of growth.’

Estateguru Speedinvest
Estateguru founder and CEO Marek Pärtel

International P2P Lending Volumes May 2019

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 607 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 Sourced.

Milestones achieved this month (total volume since launch):

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 may 2019
Table: P2P Lending Volumes in May 2019. 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

German Varengold Bank Acquires 20% Stake in Klear

Germany’s Varengold Bank AG has agreed to acquire 20 percent of Klear, a Bulgaria-based p2p lending platform in the emerging FinTech segment in Southeast Europe (SEE). The two sides have already signed an agreement under the terms of which the shares are expected to be transferred till the end of the second quarter of the year.  Varengold Bank AG is a German private bank, headquartered in Hamburg. Founded in 1995 as an asset management boutique seeking to offer individual and high-performing financial products for private and institutional clients. In 2013, Varengold was granted a commercial banking license when it transformed into to fully fledged commercial bank.

This is Varengold Bank’s first investment in a P2P lending platform, based in the SEE region. The German bank opened a branch in Sofia in November 2018 with the mission to turn it into a major hub for its expansion in Southeast Europe.

Varengold Bank will support the development and growth of Klear with a BGN 1.5 million financial package, which comprises of equity and debt funding. The proceeds from the package will be used to expand Klear’s operations across Bulgaria and SEE.

Varengold previously already dealt with p2p lending marketplaces, e.g. extending a credit line to Estonian marketplace Estateguru.

Klear provides individuals with the opportunity to lend loans and generate a return on investment and others to borrow quickly and easily at reasonable interest rates. So far, 1175 active investors have provided 938 loans through the lending platform at the amount of more than BGN 8 million.

Klear was founded by Loic Le Pichoux, Lukasz Lukaszewski and Nikolay Stanev, entrepreneurs with solid experience in consumer finance, with the idea to be fairer and more transparent in terms of interest rates and return on investment. It has been named The Best FinTech Startup in Bulgaria at the Central European Startup Awards two times in a row – in 2017 and 2018. An interview with the founder from Januar 2017.

“When we enter in partnerships, we seek proven marketplace business concepts with growth potential along with unwavering commitment from the company’s principal owners towards the mission of their organization. We look for strong teams and leaders that are ready to take and share risks in a responsible manner and want to scale up their operations globally. The business case of Klear fully fits these requirements. Supporting the development and growth of P2P lending platforms and FinTech players like Klear is one of Varengold’s key priorities in Bulgaria and SEE. These marketplace platforms are growing and expanding their operations. They are reshaping the conventional approach in the financial industry and will step-by-step replace traditional ways in lending, simply by providing significantly more favourable terms and conditions to borrowers, improving access to funds for consumers and also making raising funds more affordable. This is a fundamental change on the market and we are satisfied to take part in it actively, said Sergey Panteleev, General Manager of Varengold Bank`s Sofia Branch.

UK P2P Lending Marketplace Lendy in Administration

P2P Lending marketplace Lendy is in administration according to a statement by the British regulator FCA: “On 24 May 2019, following action taken by the FCA, Lendy Ltd, a regulated Peer-to Peer (P2P) firm, appointed Damian Webb, Phillip Rodney Sykes and Mark John Wilson of RSM Restructuring Advisory LLP as administrators. The same administrators have been appointed for two further related, but unregulated, firms: Lendy Provision Reserve Ltd; and Saving Stream Security Holding Limited. These appointments have been made by the firms, in respect of Lendy Ltd, with the consent of the FCA.”

There is an ongoing FCA investigation into the circumstances that have led to this action.

Lendy was in growing troubles over the past weeks. Lendy was put on a FCA watchlist in January. In April the FCA restricted the actions the company could take ‘[the firm must not] in any way dispose of, deal with or diminish the value of any of its assets and must not in any way release client money without in either case the prior written consent of the authority’.
The interest payments for April, due on May 1st, were delayed for 2 weeks, which Lendy blamed on technical problems with the banking partner. Early today trading on the secondary market was suspended, when the ability to trade was removed. However the trading had nearly stopped anyway as there was little buyer demand.

Lendy finally succumbed the unsustainable level of defaults of the development loans and the unsatisfactory level of recoveries from these. Members of the management were furthermore already engaged in roles in other companies.

There is an outstanding loan portfolio of about 155 million GBP, of which about 90 million GBP are in default.

These events come a year after another property lending marketplace, Collateral entered administration.

Other European p2p lending companies that failed include Boober, Comunitae and Trustbuddy.