Featured News

May 27th 2016, Daily News Digest

US

  • Top customer-rated lenders dominated by marketplace lenders except on mortgages.
  • AutoFi raises $17M in working capital.
  • Citigroup considering buying or financing loans pushes LC stock to new highs.
  • Lenny, a pure mobile lending app for Millennials, makes FICO available for free.
  • Prosper hires FT Partners and JPM to probably raise $150m.
  • Federal Trade Commission forum on Marketplace Lending agenda.

UK

  • Hargreaves Lansdow enters p2p lending with GBP 50 bil in customer funds and 783,000 clients.
  • VPC declares dividend of 1.5 pence per share, put in place leverage.

Australia

  • RateSetter allows retails investors to lend to businesses using their usual business model.

India

  • The 30 P2p lenders will likely work only via bank accounts.

China

  • Esudai, $1.07B from 330,000 investors, shut down in Guangdong.

Latvia

  • Twino is #6 largest p2p lender in Europe after 12 months.
United States

LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q1 2016, (Stock house), Rated: AAA

Personal Loans Category
1. Avant
2. Lending Club
3. Springleaf Financial Services

Business Loans Category
1. RapidAdvance
2. Credibly

Auto Loans Category
1. up2drive (a division of BMW Bank of North America)
2. RoadLoans
3. iLendingDIRECT

Student Loans Category
1. SoFi

Mortgage Category
1. Americash
2. Veterans United Home Loans
3. Wyndham Capital Mortgage
4. Howard Bank
5. Pulaski Home Bank Lending
6. AmeriSave Mortgage Corporation
7. Triumph Lending
8. First Midwest Bank
9. CBC National Bank
10. First Direct Lending, LLC

AutoFi gains $17M in investor financing, (Sub Prime), Rated: AAA

Comment: Lending Times covered AutoFi in our article about the next 8 hot startups in p2p lending. 

AutoFi, an online point-of-sale financing solution meant to leverage potential buyers’ interest when they’re on the dealership website, recently announced that it raised $17 million in new financing and is live in the market.  Crosslink Capital led the investment and was joined by Lerer Hippeau Ventures, Bruce Toll, founder of Toll Brothers, and other early stage investors.

“We believe there is a significant shift happening in consumer behavior as it relates to buying cars,” AutoFi chief executive officer and co-founder Kevin Singerman said. “More and more consumers want to not only start, but also complete their car-buying journey online. We’re building a financial technology company that will provide dealers and online car marketplaces with a point-of-sale solution to serve this new online channel.”

Singerman explained AutoFi is “re-imagining” the auto finance experience with a simple, transparent way to find affordable financing online at the point of sale when purchasing a vehicle online. AutoFi can let buyers pay for their new vehicle across multiple months via clear, straightforward interest loans at “fair” rates.

“AutoFi’s platform allows dealers to run a more efficient business, and importantly gives consumers the transparency they expect in one of the most important purchases of their lives,” he went on to say.

LendingClub Talking With Citigroup About Loan Purchases, (Wall Street Journal), Rated: AAA

LendingClub Corp. is in talks with Citigroup Inc. about the New York bank buying or providing financing for future loans made by the online platform, people familiar with the discussions said.

“We are productively engaged with LendingClub on a number of fronts,” a spokeswoman for Citigroup said.

The bank also was a big buyer until earlier this year of the loans from rival online lender Prosper Marketplace Inc. That relationship broke down after the Citigroup sale of those loans in a securitization bond priced poorly, The Wall Street Journal previously reported.

The Journal reported earlier this month that Goldman Sachs Group Inc., which also was involved with a LendingClub securitization, had been working with the firm to help it determine the best way to access capital markets in the wake of Mr. Laplanche’s resignation announcement. LendingClub has been exploring its options for the securitization deal, including private loan sales to outside investors, in the event that buyers would be interested.

Meanwhile, rival Prosper is fielding inquiries from large investors and private-equity firms that are seeking to buy loans, according to people familiar with the discussions. The firm is working with bankers at boutique advisory firm Financial Technology Partners and J.P. Morgan Chase & Co. to advise on the discussions, the people said. Reuters reported the involvement of the two banks earlier.

“Prosper is talking to banks solely for the purpose of helping us coordinate and work with investors who are interested in buying loans on our platform,” said Mr. Vermut.

LendingClub May Ask for Arbitration, Judge Says, (BNA), Rated: A

A federal judge said LendingClub may try to compel a plaintiff to arbitrate his claims in a lawsuit alleging illegal interest rates ( Bethune v. LendingClub Corp., S.D.N.Y., No. 16-cv-02578, 5/24/16 ).

Bethune’s April lawsuit, a proposed class case, says LendingClub charged him interest at almost twice the rate allowed by New York law (76 BBD, 4/20/16).

Buchwald May 24 asked the parties to submit a briefing schedule in the case, which is being closely watched because of a recent Consumer Financial Protection Bureau proposal to ban mandatory pre-dispute arbitration clauses that block class actions, as well as the potential for similar suits against other marketplace lenders.

Lenny Partners With FICO To Provide Millennials With FICO® Scores For Free, (PR Newswire), Rated: AAA

Lenny, the first app to offer credit lines to Millennials, announced today a partnership with FICO (NYSE: FICO) to provide students and post-grads with their FICO® Score, the standard measure of consumer credit risk. Through its app, Lenny users can now access their FICO® Scores at no cost, learning where they stand financially and how they can build credit history accordingly.

“By providing FICO® Scores to young adults, Lenny is demonstrating its leadership and commitment to this important group of people as they embark on their financial journeys,” said Jenelle Dito, principal consultant, FICO. “As young people move through life, access to financial services becomes increasingly important. It’s crucial that they receive the kind of education and service that Lenny provides in order to understand their creditworthiness in the eyes of lenders. Naturally, that begins with knowing their FICO® Scores – the scores used in more than 90 percent of lending decisions in the U.S.”

Lenny offers credit lines from as little as $100 to $10,000 with zero percent interest when balances are repaid in full and on time. Lenny uses a credit-deciphering algorithm to determine risk. Once a credit line has been approved, users can cash out to their bank account or instantly pay their friends using the peer-to-peer payment function.

Lenny is the first exclusively mobile-led lending app aimed at helping millennials manage and secure their credit scores. Founded by CEO Joe Bayen and COO Francesco Matteini, Lenny helps users secure credit and boost their credit rating to help in later life.  Lenny is a licensed lender in the State of California. All credit lines subject to approval. Rates and terms will vary. Terms and conditions apply.

BALANCE Announces Internship Program and Financial Education for Displaced Lending Club Interns, (WV Always), Rated: A

BALANCE, formerly known as Consumer Credit Counseling Service of San Francisco, has opened its summer internship program to include displaced Lending Club interns. BALANCE will provide interns with real world experience in their area of study, as well as the opportunity to work directly with executives on some of the nation’s most pressing financial capability issues.

BALANCE is a nationwide non-profit organization headquartered in the Bay Area. Established in 1969, BALANCE is committed to helping individuals and families overcome financial challenges and meet their goals. The company offers education and coaching programs to provide help and hope to families overwhelmed by debt, facing foreclosure, struggling to master their money, caught in a cycle of over-priced fringe financial services, or trying to purchase their first home. Last year, BALANCE helped financially empower more than 185,000 consumers.

Prosper Marketplace hires banks to explore options: sources, (Reuters), Rated: AAA

Prosper Marketplace has hired investment banks Financial Technology Partners LP and JPMorgan Chase & Co (JPM.N) to explore strategic alternatives, including selling equity in the company, according to people familiar with the matter.

Prosper retained advisers to seek out around $150 million in capital before LendingClub’s woes became public, one of the people said. The amount of capital Prosper is currently seeking remains unclear.

It is the second rate increase the platform has made this year, following a rate hike in August 2015.Prosper cut more than a quarter of its staff earlier this month. The platform’s loan volumes fell more than 10 percent in the first quarter of 2016 from the previous quarter.

FTC Announces Agenda For June 9 FinTech Forum On Marketplace Lending, FTC Chairwoman Will Open Half-Day Workshop, ( Mondo Visione), Rated: AAA

FTC Chairwoman Edith Ramirez will give opening remarks at the event.

In addition to the panel discussions, the FTC’s Office of Technology Research and Investigation will give a presentation exploring online marketplace lending, including the types of advertisements used and the data collected from consumers.
The event will take place at the FTC’s Constitution Center offices, 400 7th St SW, Washington, DC, and will begin at 9:30 a.m. and continue until 12:30 p.m. A full schedule and other details on the forum can be found on the event’s webpage. The event is free and open to the public. No pre-registration is needed.

Why marketplace lending can unlock commercial solar investment, (Business Green), Rated: A

UK businessman Graham Smith hopes his start-up, Open Energy, can help unlock investment in commercial solar energy installation by sidestepping traditional bank lending – albeit in the rapidly-growing US solar market, rather than the now “more mature and consolidated” UK market.

“Putting solar on businesses, schools, universities and government buildings is a big hodge-podge which represents a tremendous market opportunity,” he tells BusinessGreen. “Because in that sector, certainly in the US, the demand is around three and a half times that of residential for electricity.

 

United Kingdom

 

LendingClub Upheaval Threatens U.K. Market Poised for Takeoff, (Bloomberg Technology), Rated: AAA

In April, the U.K. government deemed that loans created through online platforms that match borrowers and lenders represent a new asset class safe enough for households to invest in tax-free. That promised to boost Britain’s industry, which is about a fifth the size of the U.S.’s.

P2P Global Investments Plc, a publicly traded fund that institutional investors use to bet on British online loans, is down about 8 percent since the news emerged from LendingClub. Also casting doubt on the growth outlook, Deloitte LLP predicted in a report this week that marketplace lending may amount to just 1 percent to 6 percent of Britain’s 600 billion pounds ($874 billion) in total loans by 2025, hardly a revolution in banking.

“Everything we’ve done is in contrast to what’s happening in America,” says Rhydian Lewis, the chief executive officer and founder of RateSetter, the No. 3 platform in Britain, with some 1.2 billion pounds in loans issued. “The fundamental benefits of peer-to-peer lending haven’t changed overnight — this is still a good business.”

Some investment firms are jumping into the arena. Hargreaves Lansdown Plc, the largest retail broker in the U.K. with almost 59 billion pounds under management, is building its own peer-to-peer platform. By December, the firm’s 783,000 clients will be able to lend to small businesses and consumers and earn tax-free income on up to 20,000 pounds of funds deposited into an ISA each year.

British institutions including Aviva Plc and Legal & General Group Plc, the country’s two biggest managers of pension assets, have no plans to invest in the space yet, saying peer-to-peer loans are still a niche product.

“We want to be the P in P2P, but just not yet,” Legal & General CEO Nigel Wilson told Bloomberg. “We are thinking about it, but it’s still in its early stages. There isn’t that institutional wrapper yet, the backing of big institutions like us, which will help make it safer.”

“There is definitely a role for P2P lending within the economy,” says Michaelis, whose firm holds about a 2 percent stake in P2P Global Investments. “It doesn’t mean that there won’t be defaults and things going wrong in the space — nothing is risk free.”

LendInvest: Looking forward to when fintech is just finance, (Bridging and Commercial), Rated: A

LendInvest began life eight years ago as a traditional offline bridging lender called Montello. Over those eight years, we built up a solid understanding of how the specialist mortgage world worked. It became increasingly clear just how little technology was being utilised across the mortgage process. And that presented an opportunity.

nitially, we looked to implement new technology on the funding side. With our investor platform, users can put their cash into property investments with a minimum threshold of £100. Their money can then be used to fund the short-term loans we have always specialised in.

There are some lenders who promise to completely revolutionise the way brokers and borrowers work almost overnight, as if incorporating technology is in and of itself the endgame. That’s not our strategy at all. Technology isn’t the endgame – it’s a tool.

There is no magical algorithm for underwriting mortgages. Every single one of our loans is underwritten by experienced, knowledgeable underwriters. That’s the way it should be – real people making the important decisions, supported by quality technology that helps them to do their jobs.

VPC Specialty Lending Declares Dividend, (Crowdfund Insider), Rated: AAA

VPC Specialty Lending Investments PLC has declared an interim dividend of 1.50 pence per share for the three month period to 31 March 2016, including 0.19p contributed from the Company’s other distributable reserves.

VPC stated that during the quarter the company’s revenue return was 1.31p – below their targeted annualized dividend.

VPC said the weighted average gross coupon of the invested portfolio is within expectations at approximately 14.73% as of 31 March 2016. VPC has selectively accessed the securitisation market and added leverage to certain assets in the portfolio.

As an example, the company explained it was substantially fully invested on 29 January 2016, but was only 72% invested at 31 March 2016 after closing a securitisation transaction and a leverage facility in February and March, respectively. VPC expects stronger performance over the long term.

VPC invests in the online lending market across the US, Europe, UK and Australia.

Proplend reduces investment minimum to £1,000, (SWNS), Rated: A

Proplend Ltd, the UK’s specialist in commercial property peer-to-peer lending and pioneer of the P2P Loan Tranche Model, are pleased to announce that they have reduced the minimum loan investment amount to £1,000 with immediate effect.

Australia

RateSetter allows retail investors to lend to business, (The Sydney Morning Herald), Rated: AAA

Retail investors will be able to fund business loans for the first time in Australia after the corporate regulator granted a new licence to the peer-to-peer lending platform RateSetter.

There are several models emerging in this space. Prospa, Moula, OnDeck and Spotcap are funded by institutional investors and lend off their own balance sheets rather than operating a marketplace for loans. Rival ThinCats is a marketplace for business loans but only sophisticated investors can participate.

Most of the online business lenders to have emerged in recent years provide unsecured loans to business for short durations at relatively high interest rates. RateSetter will provide some unsecured lending but will focus on secured loans.

However, the security will not be in the form of residential property, as is typically required by banks.

“Traditional lenders are rigid and formulaic in how they decide to lend – it is all about the home,” RateSetter chief executive Daniel Foggo said. “We will look at a wider range of security options, including the assets of the business or personal guarantees.”

The effective interest rate for a small business taking out a $30,000 loan for two years would begin at 7.3 per cent per annum, with some security, Mr Foggo said. RateSetter will offer loans of up to $150,000 for six months to five years.

SpotCap said on Thursday its lending had passed $11 million in its first year of operations. It expects this number to triple over the next year. Its loans are unsecured and have an interest rate of between 0.5 per cent and 2.5 per month, depending on risk.

Investors in the business and consumer loans are protected by a “provision fund” that provides compensation for loans that default. For riskier loans, RateSetter requires the borrower to pay more into the provision fund, which currently holds $1.8 million, almost twice the level of RateSetter’s current estimate of defaults.

“We are very comfortable we are provisioned enough to cover our stress-test scenarios,” Mr Foggo said.

India

The way forward for peer-to-peer lending, (Mint), Rated: A

Participants:

  • Cyril Shroff, managing partner of law firm Cyril Amarchand Mangaldas;
  • C.B. Bhave, former chairman of the Securities and Exchange Board of India;
  • Tamal Bandyopadhyay, consulting editor of Mint;
  • O.P. Bhatt, former chairman of State Bank of India;
  • Alok Prasad, former chief executive officer of Microfinance Institutions Network;
  • Karan Bhagat, managing director of IIFL Private Wealth, at the Mint Marketplace Lending Summit, in Mumbai on 17 May.

RBI would want to see if the risk would be spelt out in a manner that the market understands them. RBI must take into account what kind of lenders can come onto the platform and to initially some requirement of net worth or setting of a bar. Worthwhile to have a small legal working group to take pre-emptive actions in terms what amendments are required in legislation.

RBI keeps a watch, demands P2P lending only via bank accounts, (The Economic Times), Rated: AAA

The Reserve Bank aims to keep a close check on peer-to-peer (P2P) lending, which has been booming globally, by stipulating that anyone looking to lend through such online platforms has to be a bank account holder. With banks enforcing stringent know your customer (KYC) norms, this should ensure that fund sources can be tracked and that the P2P route won’t be used to launder money.

The RBI wants to make it mandatory that all transactions between borrowers and lenders are conducted through banks but the regulator is not expected to set an upper limit for the amounts that can be loaned through the platforms. The regulations will be aimed at simplifying the process of recognition for the newly emerging lending sector, experts said.

India’s P2P lenders number around 30 online platforms, including Delhi-based Faircent, i2iFunding and Mumbai-based Lenden Club. A few weeks ago, JM Financial picked up a 9.84% stake in Faircent and i2iFunding raised around Rs 2 crore.

Faircent has more than 6,000 borrowers on its platform and has processed loans worth Rs 5 crore in the last 20 months of its operations. I2iFunding has around 200 investors and has processed Rs 50 lakh of loans in the six months of its operations.

China

Another One Bites the Dust: Chinese Police Shut Down P2P Lending Platform Esudai, (Crowdfund Insider), Rated: AAA

Add Esudai to a growing list of fraudulent Chinese P2P lending platforms that are being shut down by the Chinese government.  Today Reuters reported that police in the Huizhou, Guangdong province, had detained 13 executives including legal representative and chairman Jian Huixing from the Guangdong Huirong Investment Co’s P2P lending platform Esudai.  As expected, the website is now dark.

Since its founding in 2010, Esudai allegedly raised over 7 billion yuan ($1.07B) from 330,000 investors. Esudai, which roughly translates to “quick loans”, is accused by the local police of illegally collecting deposits, while executives are accused of taking hundreds of millions of yuan in investor money for their own use, reported Reuters.  On 20 May, Huizhou government officials visited Esudai’s offices for inspections, reported Reuters; the company posted the news on its website, adding that it was cooperating in the investigation and has operated legally and transparently for six years. As hoped and expected, customer deposits and withdrawals have been suspended.

Latvia

Peer to Peer Lender TWINO Celebrates One Year Anniversary, (Crowdfund Insider), Rated: AAA

Latvia-based Twino is celebrating its one year anniversary.  After 12 months of operation, the peer to peer lending platform states it has originated over €22 million in loans.  Twino says their rapid growth makes them the “fastest growing platform in Europe.  Investors have earned approximately €325,000 in interest during the past year.

Today, Twino says it ranks as number 6th in Europe in P2P consumer lending.

According to information provided by the company, Twino now has more than 2500 active investors from 29 different countries. The most active are as follows:

  • Germany – 22%
  • Estonia – 17%
  • Latvia – 16%
  • UK – 7%

Twino was previously known as Finabay which launched in 2009 as an unsecured consumer loan provider that has originated approximately €240 million in loans.

 

 

Author:

George Popescu
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 ( www.currencymountain.com ), 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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