Metro Bank Buys Ratesetter UK

Ratesetter logoMetro Bank today announces that it has agreed to acquire Ratesetter* (Retail Money Market LTD) for initial consideration of 2.5 million GBP, with additional consideration of up to 0.5 GBP million payable 12 months after completion subject to the satisfaction of certain criteria and further consideration of up to 9 million GBP payable on the third anniversary of the completion of the transaction, subject to the satisfaction of certain key performance criteria.

The acquisition does not include Ratesetter’s holding in Ratesetter Australia which is being retained by Ratesetter shareholders.

Ratesetter will no longer use money for retail investors to fund new loans. All new loans will be funded by Metro Bank’s depositor base. Ratesetter will continue to manage the existing Ratesetter loan portfolio and Provision Fund on behalf of its existing peer-to-peer investors, with Metro Bank assuming no credit risk for these existing loans.

Ratesetter states “For investors, there is no change to your investment, with RateSetter continuing to manage the loan portfolio and the Provision Fund. Our Investor Services team remains available in the usual way to assist with any questions you may have and will continue to provide all administrative services. “. Retail Investor reactions on  the announcement are mixed. While some welcome the development thinking that it will stabilze Ratesetter and reduce mid-/longterm risk for repayment of outstanding funds, others worry that the risks for their committed funds might increase as there will be no new loans and managed funds will thereby decrease.

Metro Bank will operate Ratesetter as an independent platform and originate loans under both the Ratesetter and Metro Bank brands.

Rhydian Lewis and Peter Behrens and CFO Harry Russell will join Metro Bank’s  team.
The transaction will be funded from existing cash resources, whilst the final fair value and goodwill elements will be determined as part of the Company’s year-end accounting process. The acquisition is anticipated to reduce the Company’s CET1 ratio by circa 0.3% at 30 June 2020 on a pro forma basis.

The acquisition is conditional upon approval from the Financial Conduct Authority and shareholders holding at least 60 percent of Ratesetter’s shares acceding to the relevant transaction documents and is expected to close by the fourth quarter this year. The board of directors of Ratesetter unanimously recommends the transaction and that shareholders of Ratesetter accede to the relevant transaction documents. Shareholders holding 45.7 percent of Ratesetter’s shares have signed the relevant transaction documents at the date of this announcement. Once Ratesetter shareholders holding 60 percent of Ratesetter’s shares have signed or acceded to the relevant transaction documents, it is expected that Ratesetter shareholders who have not signed or acceded to the transaction documents will be dragged into the transaction, resulting in Metro Bank acquiring 100 percent of Ratesetter’s shares at completion.

(Source: press releases/retail investor statements)

German Varengold Bank Provides Credit Line to Estateguru

Estonian property p2p lending marketplace Estateguru announced that it has secured its first institutional investor.

In March 2018, Estateguru signed the firm’s first institutional credit line to be invested in loans originated in the Baltic market with Germany based Varengold Bank AG.

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.

Estateguru CEO and co-founder Marek Pärtel comments: “Establishing the EstateGuru – Varengold cooperation is a proof of having found a mutually beneficial cooperation model between a traditional financial institution and a fintech company. This is a clear sign that building a diversified portfolio of property backed loans is a very appealing instrument for institutional investors. Our Pan-European retail investor base is still the main source of capital. …”

Estateguru COO Mihkel Stamm adds: “Establishing a cooperation with Varengold Bank is an unprecedented assurance of the quality of EstateGuru’s business processes. The due diligence process was thorough and lengthy, during which Varengold’s representatives were convinced of EstateGuru’s product, procedures and the people behind the business.“

Since the establishment in 2014 Estateguru’s investor base of over 11 000 investors have funded in excess of 50 million EUR of secured property loans in Estonia, Latvia, Lithuania, Finland and Spain. With the recent developments, including entering 2 new markets in 2018 Q1, establishing an institutional credit line and an ongoing equity round, the firm is setting goals for the next European markets, to establish its Pan-European reach in coming years.

 

Auswide Bank Takes Over Controlling Majority of P2P Lending Service MoneyPlace in Australia

Auswide Bank Ltd (ASX:ABA) is increasing its equity stake in peer-to-peer lender MoneyPlace Holdings Pty Ltd (MoneyPlace). Auswide Bank will have a controlling interest of at least 51% in MoneyPlace with the prospect of increasing that interest up to 75% dependent on the final take up of other MoneyPlace shareholders in a capital raising initiative being undertaken by MoneyPlace.
MoneyPlace launched in October 2015 after receiving its retail and wholesale Australian Financial Services licence and provides loans of 5000 to 35,000 AUD through its peer-to-peer lending platform. Auswide Bank acquired a 19.3% equity stake in MoneyPlace in January 2016 while also committing funding to the Melbourne – based P2P lender’s consumer lending program.
Managing Director, Martin Barrett said Auswide Bank has been impressed with the platform, skills, capability and performance of MoneyPlace over the last 12 months, “Our funding has now exceeded 8 million AUD over the last 7 months and momentum continues to build. Loan quality has also been performing above expectations and we remain optimistic regarding future growth opportunities for the MoneyPlace and Auswide Bank partnership.”

Banque Postale Invests in Wesharebonds – Takes 10% Stake

banque-postale-wesharebondsFrench Banque Postale makes its first investment into a fintech and takes a 10% stake in Wesharebonds. Wesharebonds was launched in June 2016 after one year work to obtain approval by regulator AMF. The company previously raised 3.8M EUR from 50 business angels (0.6M for its own funding and 3.2M as supply to co-invest into the offerings on the marketplace). Wesharebonds allows indiviudals and companies to invest into bonds (and equity crowdfunding) to SMEs. The valuation was not disclosed.

The parties announced that the capital will be used to expand the product offering.

Cyril Tramon, WeShareBonds CEO expressed that they wanted a partner who shared their vision and could support development.

Banque Postale is a subsidary of La Poste Groupe, which claims ana ctive customer base of 10.8 million.

wesharebonds
Wesharebonds team (Source: Wesharebonds)

Discussion Paper on P2P Lending Published by Deutsche Bundesbank

The central bank of Germany, Deutsche Bundesbank, has published a discussion paper on the role of p2p lending in the consumer credit market written by Calebe de Roure, Loriana Pelizzon and Paolo Tasca. The study analyses data of German p2p lending marketplace Auxmoney.

Research Question

In recent years, we have begun to observe the growth of the internet economy, which has progressively led to “crowd-based” platforms and the direct matching of lenders and borrowers. Via peer-to-peer (P2P) lending platforms the decision process of loan origination is given into the hands of private lenders and borrowers. This paper investigates how the P2P lending market fits into the credit market and specifically aims to answer the following questions: Why do retail consumers look for P2P financial intermediation? Are the interest rates charged by P2P lenders in Germany higher than those of banks? Are P2P loans more risky than bank loans? Are internet-based peer-to-peer loans substitutes for or complementary to bank loans?

Contribution and Results

The paper shows that loans channelled via P2P platforms involve higher interest rates than loans channelled via the traditional banking sector. They are also riskier than those of banks. However, when adjusted for risk, the interest rates are comparable. Moreover, analysis of the different segments of the bank credit market and P2P lending shows that, after having controlled for interest rate and risk differences, the bank lending volumes are negatively correlated with the P2P lending volumes. Our finding suggests that high-risk borrowers substitute bank loans for P2P loans since banks are unwilling or unable to supply this slice of the market. Continue reading

Lendico and PostFinance Launch Joint Venture in Switzerland

PostFinance one of the largest five retail banking institutions in Switzerland will partner with Lendico to launch joint venture Lendico Schweiz, which will facilitate loans to SMEs in Switzerland.

From the last quarter of 2016 onwards, the company will facilitate crowdfunding for small and medium-sized enterprises (SMEs) in Switzerland. It is entering the market in close collaboration with PostFinance, a subsidiary of postal carrier Schweizerische Post.

Together the partners would like to establish a new form of SME financing in Switzerland. The aim of the joint venture is to provide the numerous Swiss SMEs with a modern alternative to traditional bank financing. The two partners are contributing their complementary expertise in customer contact and the entire lending and repayment process to the joint venture.

Sources say PostFinance was barred by regulation to directly lend to SMEs and had to find a third party partner to enter this market.

‘With 110 years of experience in Swiss banking services and around three million customers, we can think of no better partner than PostFinance for our entry into the Swiss market. As part of the continued expansion of an international credit marketplace, this joint venture represents a significant step in our business development,’ says Dr Dominik Steinkühler, co-founder and managing director of Lendico.

Hansruedi Köng, CEO of PostFinance, is delighted to be able to join forces with Lendico, a partner which has established itself and enjoyed success internationally in a rapidly expanding industry. ‘Our vision for this cooperation is to take crowdlending in Switzerland from niche status to the mass market. The combination of Lendico’s innovative capacity and our structures in Switzerland offers the best conditions for Lendico Schweiz AG to become a market leader in the future.’