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.

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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.’

Commerzbank will Launch P2P Lending Platform Main Funders Next Week

At a press conference this morning in Frankfurt, Michael Kotzbauer of Germany’s second largest bank Commerzbank and Birgit Storz of Main Incubator announced that the new platform Main Funders will launch next week. Main Funders is part of a broader digitalisation strategy of Commerzbank and the first project Commerzbank and Main Incubator built together. Main Incubator previously invested in several Fintech startups.

The aim of the new platform is to bring together SMEs seeking loans in the range of 200K to 10M Euro for up to 5 years and professional investors (institutional and large companies). Both will be already customers of Commerzbank and Commerzbank will make use of its regional sales force to bring borrowers onto the marketplace.

Kotzbauer explains strateg of Commerzbank with context Main FundersBorrowers will list their project n the platform, visible only to logged in investors, which in can browse the listings and select those that match their interests. Main Funders will assign credit grades to the loan requests and set the interest rate, taking into account that all loans will be unsecured. Since borrowers already have a credit history with Commerzbank, Storz says that the process, including the handling of the contracts, will take only a short time frame.

Main funders charges borrowers 0.45% of the loan amount multiplied with the duration and  investors 0.2%.

Unlike on other platforms investors won’t have to ‘park’ cash to be able to invest but rather will be able to pay for funded loans after all contracts have been signed, an advantage to avoid cash drag.

Once the loan is fully funded, the loan will be serviced by a third company (not Commerzbank or Main Funders).

Main Funders says it is uniquely positioned compared to other p2p lending marketplaces in that it is able to facilitate very large loans and benefits from the relationship and trust Commerbank already has to target customers.

With Main Funders Commerzbank aimes to:

  • increase customer satisfaction
  • strengthen its competitive position
  • react to rgulatory requirements
  • create a basis that will allow it to build further innovative loan products upon

Storz declined to give a figure on the expected loan volume in the first year, saying it is important to be able to react and adapt quickly in such an innovative product offering.

Some questions in the press conference targeted whether Commerzbank is cannibalizing the own products and if there is no conflict of interest in the decision of whether to finance a loan itself or put it on the platform.

Kotzbauer said that Commerzbank is reacting to the wish of some of their customer to diversify financing options. The decision of whether to finance the loan request themselves or put it on the platform is made after consulting with the borrower on his financing needs and wishes and not discriminating by credit grades or other parameters.

Main FundersCommerzbank is one of the first large banks in the world to have developed its own platform (together with its incubator). Other banks have taken the route to acquire lending startups (e.g. Barclay Africa Rainfin, Westpac with SocietyOne, or Banca Sella at Smava and Prestiamoci). Several banks are investing into consumer and SME loans on p2p lending marketplaces, especially in the US and the UK.

The initiative of Commerzbank is likely going to give a boost to awareness and credibility of p2p lending in Germany, even though it remains close to the conventional process with the restriction to existing customers and institutional investors. Continue reading

German Bank Commerzbank Plans to Launch Own P2P Lending Marketplace Within First Half of 2016

Informed sources told P2P-Banking.com that German Commerzbank plans to launch an own p2p lending marketplace called ‘Main Funders’ in the first half of 2016. The marketplace aims to connect SMEs seeking funding with investors. The name ‘Main Funders’ is a wordplay as ‘Main’ is the name of the river passing through Frankfurt, where the bank has its headquarter. The service is developed together with Main Incubator, the fintech incubator of Commerzbank. Currently all relevant domain names for Main Funders just redirect to the frontpage of Main Incubator. Commerzbank registered a trademark for ‘Main Funders’ in January 2016.

It remains to be seen whether this will be a full fledged marketplace, that also handles all transactions, or more a business initiation facilitator. A short mention in the 2015 annual report of Commerzbank uses the term ‘peer-to-peer-lending-plattform’ to describe Main Funders.

Under German regulation only banks can fund loans. To comply with this all existing p2p lending companies in Germany partner with a transaction bank which originates the loan and then sells the proceeds (repayments and interest) to the investors. So far a handful of small specialised banks were involved in these transaction. Commerzbank would be the first large German bank to enter the space and also the first bank to build an own platform.

MoneyPlace and Auswide Bank Enter into Strategic Relationship

MoneyPlace, Australia’s second fully licenced peer-to-peer (P2P) lender and Auswide Bank have entered into a significant strategic relationship and equity deal.
The long term relationship, the first of its kind in Australia, includes a 5 year deal to fund up to 60 million AUD to assist MoneyPlace to grow its consumer lending and for the bank to grow and
diversify its financing activities nationally. Additionally Auswide Bank is taking a 20 per cent equity stake in MoneyPlace.

MoneyPlace launched in October 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.

MoneyPlace CEO Stuart Stoyan said the relationship is a critical milestone for P2P lending globally and demonstrates how banks can work with P2P lenders to provide fairer, better rates
for all customers. Continue reading

Whatthefintech

Yesterday I spent my day at the ‘Whatthefintech 2’ event at Startplatz Cologne. The attendees were an interesting mix from startups, banks, service companies and interested users.

While none of the pitches and startups were focused on p2p lending, it was highlighted several times as one of the use cases. An interesting discussion evolved around the question whether startups have sustainable business models or just fill in a gap that is there for a limit time span. One argument was that too many fintech startups just add an incremental improvement rather than solve a big problem. An example given was that many startups can deliver a much better user experience than banks, so they win users now. But banks are learning and will catch up on the field of presentation and user experience and when the playing field is leveled then the startup has not much to show as the data and backend processes are still owned by the bank.

I think this is an important point but one that is answered by p2p lending marketplaces – they have a business model that adds real value by offering a more efficient process than banks do. While some p2p lending marketplace use and cooperate with banks, they certainly have developed own technologies which are a core for their product and are not a mere sales-frontends as some of the criticized fintech models.

The banks certainly are eager to open up to the developments. Jana Koch of comdirect bank presented the ‘Startup Garage’ program of comdirect bank, which is a essentially co-working space with mentoring from the bank professionals for teams which have just an idea yet and want to bring that to the first development stage. The bank pays the team to enable them to concentrate on the development of their idea, but does not expect equity or ownership of the idea. From the banks viewpoint the program will be kind of an outsourced research and development offering fresh impulses to the thinking of the bank’s executives.

Some other viewpoints out of the banking sector surprised. Two persons from major banks stated that they expect the branch to play a very important role in the next 20 years as a sales channel for banks and only thereafter to become obsolescent. Maybe this is the paradox that Bankstil also commented last week. What banks publicly say is that the branch is essential and used even by their young and technology liking clients. But what they do is that they close branch after branch after branch.

I liked the presentations, especially those by Peter Barkow who talked about the relationship between German fintech and venture capital and  Gernot Overbeck of Fintura, a comparison tools which promises to find the cheapest bank loan for SMEs within 15 minutes and close it within 72 hours.

The pitches of the 3 pitching fintech startups were well crafted (they had 7 minutes each).

As usual the most interesting part for me was the networking.

I am really looking forward to the next conference I’ll attend, which is LendIt in London in 2 weeks. If you register you can still use discount code wiseclerkvip to get 15% off.

 

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Impression from the event. More photos on Twitter.

 

 

Lending Club and Citi Team Up on Community Lending

Lending Club Lending Club Logoand Citi are launching a pioneering new partnership with Varadero Capital L.P., an alternative management firm focused on specialized credit investments, to facilitate up to 150 million US$ in loans designed to provide more affordable credit to underserved borrowers and communities.

Renaud Laplanche, founder and CEO of Lending Club, said, “Many banks across the country are looking for opportunities to enhance their community lending efforts for low- and moderate-income families. We’re excited to expand the use of the Lending Club platform to make this process easier for Citi and other banks, and help lower the cost of credit for borrowers.”

“It is important that we help increase access to financing alternatives for American families,” said John Heppolette, Co-Head and Managing Director of Citi Community Capital at Citi. “This partnership is a direct response to that need and will help provide a viable source of responsible credit. We are proud to be part of this initiative.”

Citi Community Capital is the group within Citi that focuses on providing community development loans and investments that help meet the credit needs of communities and which receive consideration under the Community Reinvestment Act (CRA). Continue reading