April 21st 2016, Daily News Digest

  • Lending Club raises rates,again. Multiple reactions to the change.
  • A great discussion: are P2p lenders turning into fund managers or banks?
  • 89% of respondent plan to take advantage of IFISA.
  • Commerzbank plans to launch own p2p lending platform.
  • Finland, a p2p market hitting above its weight size.

LendingClub Corporation, 8K (SEC website), Rated: AAA

Lending Club raised interest rates for lower grades borrowers again on April 20th.
Here are tables from their K8 form filed with the SEC about the changes to their 36-months product.
Similar changes were applied to their 60-months product. Please see more information in their K8 form.
lending club rate increase 1lending club rate increase 2

LendingClub Boosts Projected Loan Losses, Raises Rates on Some Loans, (Wall Street Journal), Rated: AAA

The disclosure, made late Wednesday in a securities filing, represents a change from LendingClub CEO Renaud Laplanche’s comment at a February investor conference that there hadn’t been any sign of deteriorating loan performance at the San Francisco company.

LendingClub, the largest player in that business by loan volume, specifically boosted its projected loan losses on all borrower segments for its three-year loans from between 0.22 percentage points and 3.56 percentage points compared with its previous expectations in November.

By not raising the rates it charges its safest borrowers, the company said investors who hold loans will likely experience lower returns.

Online small-business lender On Deck Capital Inc. said in a separate filing Wednesday that the amount of its unpaid loan balances lost to defaults was mostly higher for loans in 2015 than for loans of a similar age made in prior years.

Other lenders have made similar moves. In February, online lender Prosper Marketplace Inc. increased rates by on average 1.4 percentage points because of “the current turbulent market environment that we have witnessed since the beginning of 2016.”

LendingClub Increases Rates as Outlook Sours With Some Loans, (Bloomberg), Rated: AAA

The firm boosted interest rates on new loans by a weighted average of 23 basis points, mainly for lower credit grades, according to a filing on Wednesday. A basis point is one-hundredth of 1 percent.

“The new loss forecasts and interest-rate revisions released today incorporate both the impact of under-performing pockets and our prudent stance on the economic outlook,” the company said in the filing.

The deterioration “occurred in a macro environment that has yet to see broad-based signs of economic stress,”

The latest changes mean borrowers assigned credit strengths of E, for example, will have to pay a roughly 22.6 percent interest rate for a three-year loan — or 3.64 percentage points more on average than they would have in November.

The highest three grades of loans continue to perform within expectations, it said. But in lower grades, there were “pockets” that underperformed, and the company stopped lending to those borrowers earlier this year, it said. They represented almost 5 percent of loan volume.


P2P lending: Does the industry need more than just transparency?, (City A.M.), Rated: AAA

“Skin in the game” is an expression thrown around a lot in the P2P industry. Platforms don’t have banking licences and the majority don’t lend off their own balance sheets. So the question for some time now has been “what loss position will the platform take in the event of loan failure?”

“The question now is, ‘is a platform playing it like a bank or like an asset manager?’

While many platforms are becoming more like tech-enabled investment managers – 44 per cent of UK lenders on platforms opt to use auto-bid tools – others are deploying both their own capital and that of lenders in the way a bank would: “they are recycling your capital to reduce the cost of funding”.

Aside from the traditional P2P model, matching lenders and borrowers, a new breed of P2P funds is emerging. Rather than lending money through the platform to a borrower, an investor puts their money into the fund, which then lends it on.

For platforms that are already lending their own capital alongside other investors, their activities look increasingly “bank-like”. “The difference is that banks make a regulatory trade-off [in the form of capital requirements]. Marketplace lenders don’t,” says Wardrop.

Wardrop says, as a platform, “either you’re going to say, ‘I’m going to specialise in the client service side’ and move towards investment management, or you’re going to drive your cost of funding as low as possible. If you can’t access deposit money, you’ll need enormous scale to achieve that and remain competitive.”

Lending Works Sees Strong IFISA Demand, (Alt Fi), Rated: A

Insured P2P lending outfit Lending Works is seeing strong demand for the Innovative Finance ISA among its investors, and may also have cracked the problem of multi-platform IFISA investment.

Lending Works has surveyed its lenders with a view to gauging appetite for the recently launched IFISA, finding that 89% of respondents plan to take advantage of the product once able to.

We’ve long been of the understanding that IFISA money may only be invested with one P2P provider in a given tax year. In other words, investors would have to invest across a number of tax years in order to build up a multi-platform IFISA. But Lending Works rightly points out that investors are free to transfer unlimited funds from pre-existing ISAs into IFISAs, and are free also to split these funds across a range of different peer-to-peer lending platforms. HMRC has confirmed this contention.

LendingClub: Bright Future Ahead, (Seeking Alpha), Rated: A

LendingClub is undervalued because of macroeconomic, legislative, and competitive concerns that are causing over-conservative analyst expectations.

LC is projected to continue to post high revenue growth and higher earnings per share in 2016.

The management team had made successful value-creating decisions for the company and will continue to do so in 2016 and beyond.

Alt-SME Lenders Go On The Defensive, (Pymnts), Rated: A

The alternative lending sector is bracing for gentle, yet potentially industry-changing regulation, with the U.S. Treasury Department, the Consumer Financial Protection Bureau, the Federal Reserve and other policymakers having taken recent steps to learn more about these companies ahead of any legislation.

The latest effort to show that market alt-lenders can be reliable, competitive and effective occurred just days later, when the Small Business Finance Association (formerly the North American Merchant Advance Association) announced its own list of best practices.

The initiative repeats much of what predecessors have championed: transparency, responsibility, fairness and security.

The alternative lending industry is probably here to stay, though not to compete with banks as once assumed. Players have instead been emphasizing the collaborative relationship between alt-lenders and traditional banks, but with increasing efforts to prove they have a space in the market, alternative SME lenders seem to have repositioned themselves on the defensive line.

German Bank Commerzbank Plans to Launch Own P2P Lending Marketplace Within First Half of 2016, (, Rated: AAA

Informed sources told that German Commerzbank plans to launch an own p2p lending marketplace called ‘Main Funders’ in the first half of 2016.

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.

A short mention in the 2015 annual report of Commerzbank uses the term ‘peer-to-peer-lending-plattform’ to describe Main Funders.


The Alternative Finance Market in Finland, (Alt Fi), Rated: A

Comment: as the title indicates this article covers the Finnish market.

According to a recent report by Cambridge University and EY, Finland ranked 8th in terms of volume of alternative finance transactions in 2014 (on a table of 16 European countries), registering a total transaction volume of €17m.

The country performed slightly better on a per capita basis – with €3.1 per person – placing slightly behind the UK, Estonia, Sweden and The Netherlands.

Finland is home to 4 marketplace lending platforms – 3 locals, Fellow Finance, Fixura, and 1 foreigner, Bondora. The country houses 5 equity crowdfunding platforms – 2 locals, Invesdor and Innovestor.

Merger Between a P2P Lending Marketplace and an Equity-Based Crowdfunding Platform, (, Rated: A

In Germany Kapilendo and Venturate announced they will merge. Kapilendo is a p2p lending marketplace offering loans between 30,000 and 2.5M Euro to SMEs for loan terms of 1 to 5 years. The minimum amount for investors is 100 Euro. Investors are not charged any fees. Kapilendo was launched in 2015 and recently gained some publicity, when it succeeded to fund a 1M Euro, 3 year loan to first division soccer club Hertha BSC in 10 minutes.

Venturate is a small equity-based crowdfunding site, launched in summer 2015.

After the transaction FinLab now owns 25.1% of Kapilendo.

Regulators Are Paying More Attention to Online Lenders, and Why That’s a Good Thing, (, Rated:A

Pressure on the alternative lending industry to become more transparent continues to mount.

On Monday, U.S. Senators Jeff Merkley (D., Oregon), Sherrod Brown (D., Ohio), and Jeanne Shaheen (D., New Hampshire) sent a letter to the U.S. Government Accountability Office, asking it to look more closely at so-called peer-to-peer lenders, as well as other alternative lenders that have cropped up in recent years.

A recent report from Balboa Capital suggests there are now as many as 1,300 alternative lenders, with their number increasing about 100 percent in 2015 alone.

China internet finance crackdown targets fly-by-night operators, ( Financial Times), Rated: A

Last week multiple agencies led by the People’s Bank of China approved a plan for cleaning up internet finance, respected business news magazine Caixin reported on its website. The multi-agency task force will undertake a one-year crack down on fraud and risk in online payments, peer-to-peer lending, equity crowdfunding, wealth management and online insurance, Caixin said.

The latest plan instructs province-level agencies responsible for registering corporations — known as administrations for industry and commerce — to not approve new registrations of companies for which the world “finance” appears in their name or business description, Caixin reported separately.

Some 3,984 P2P platforms had loans outstanding of Rmb504bn at the end of March, according to Online Lending House, a website that tracks the industry.

Crowdfunding and wealth management platforms are also barred from selling hedge fund-style investment products to retail investors who do not meet the qualifications for buying them through offline channels, or from packaging multiple such funds into synthetic products, the plan said.

Data From P2P Lender Crowdstacker Suggests: Government Reforms Should Disrupt How Brits Should Save & Invest, ( Crowdfund Insider), Rated: B

The company reports that top line data suggests the average Brit was already missing out on up to £1000 a year, even before April’s changes came into force, by simply not actively managing their money.


P2P lenders fear strict regulations may hurt business, (Economic Times), Rated: B

Comment: article covering the Indian market.

MUMBAI: The fledgling peer-topeer (P2P) lending space, which has been on a free run till now, is worried about regulations which could cripple the nascent sector which has been showing huge potential for growth. But if early indications from the central bank are anything to go by, the P2P lenders are confident that the central bank would be accommodative towards them.
“We have been interacting with the RBI for two years now -what would be best for the sector as well as investors is if they can pick up some of the best practices in the industry like it had been done in the UK and set them down as precedents and guidelines,” said Rajat Gandhi, CEO, Faircent, one of the biggest P2P lenders in India.

China Begins Crackdown on P2P Lenders by Banning Loans for Down Payments, (Nasdaq),Rated: B

Comment: article with old data.

Over the last few years, China has seen a substantial surge in the P2P lending sector. It has enjoyed an almost 400% growth rate over the last two years, originating an estimated $151 billion in loans in 2015.
Zhou Xiaochuan, the Governor of the People’s Bank of China, said on Sunday, March 13 that internet loan firms had been banned from lending money for down payments.

The most likely alternative is that the government continues to move slowly and deliberately in reining in the excesses of the Chinese P2P sector. We can expect more arrests and public trials, and some new regulations targeting problem areas. That said, we should not expect to see regulators mandating transparency and lending standards as stringent of those required for P2P lenders in the US and Europe.

Funding Circle bolsters business development team with senior hire from Barclays, (Asset Finance International), Rated: B

The Funding Circle has bolstered its business development team with the hire of Neil Mullane, formerly head of business and corporate banking for Barclays across West London.

MPOWER and Flywire Partner to Simplify International Student Loan Payments, (Press Release), Rated: B

MPOWER provides small loans to high-potential students and international students who are left out by traditional banks. In addition to providing students with access to the financial resources necessary to attend and complete college, MPOWER builds students’ credit histories, provides them with personal finance education, and offers gateway financial products to prepare them for life after college.

Flywire, formerly peerTransfer, is a leading provider of high-ticket payment solutions, connecting institutions on six continents with consumers from around the world. Introduced four years ago as a way for international students to pay their tuition for studies abroad, Flywire is now welcomed by over 900 colleges and universities.

CordiaGrad, Leader in Student Loan Refinancing, Relaunches as Purefy, ( Business Wire), Rated: B

Purefy, formerly CordiaGrad, is a national online lender offering student loan refinancing. Purefy offers low interest rates and five, eight and 12-year terms to high-achievers who have earned their degrees and launched their careers.

Author: George Popescu


About the author

George Popescu

Serial entrepreneur.

George sold and exited his most successful company, Boston Technologies (BT) group, in 2014. BT was a technology, market maker, high-frequency trading and inter-broker broker-dealer in the FX Spot, precious metals and CFDs space company. George was the Founder and CEO and he boot-strapped from $0 to a $20+ million in revenue without any equity investment. BT has been #1 fastest growing company in Boston in 2011 according to the Boston Business Journal and the only company being in top 10 fastest in 2012-13 as it was #5 in 2012. BT has been on the Inc. 500/5000 list of fastest growing companies in the US for 4 years in a row ( #143, #373, #897 and #1270). After the company sale in July 2014 until February 2015 George was Head-of-Strategy for Currency Mountain ( ), a USD 100 million+ holding company focused on retail and medium institutional currencies, precious metals, stocks, fixed income and commodities businesses.

• Over the last 10 years, George founded 10 companies in online lending, craft beer brewery, exotic sports car rental space, hedge funds, peer-reviewed scientific journal ( Journal of Cellular and Molecular medicine…) and more. George advised 30+ early stage start-ups in different fields. George was also a mentor at MIT’s Venture Mentoring Services and Techstar Fintech in NY.

• Previously George obtained 3 Master's Degrees: a Master's of Science from MIT working on 3D printing, a Master’s in Electrical Engineering and Computer Science from Supelec, France and a Master's in Nanosciences from Paris XI University. Previously he worked as a visiting scientist at MIT in Bio-engineering for 2 years. George had 3 undergrad majors: Maths, Physics and Chemistry. His scientific career led to about 10 publications and patents.

• On the business side, Boston Business Journal has named me in the top 40 under 40 in 2012 in recognition of his business achievements.

• George is originally from Romania and grew up in Paris, France.


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