Monday April 23 2018, Daily News Digest

Marcus lending

News Comments Today’s main news: Top customer-rated lenders by loan product. Kabbage, Ingo Money partner on SMB loan disbursements. RateSetter offers 100 GBP cash incentive to ISA investors. TransUnion to buy Callcredit in Europe for $1.4B. Today’s main analysis: Bank earnings. Today’s thought-provoking articles: P2P lending vs. stock markets. Using psychometry for loan disbursement. Don’t fear the robo-advisor. Bank earnings. Fintech leaders […]

Marcus lending

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United States

LendingTree Announces Top Customer-Rated Lenders by Loan Product for Q1 2018 (Markets Insider) Rated: AAA

LendingTree, the nation’s leading online loan marketplace, today released its quarterly list of the top customer-rated lenders on its network based on actual customer reviews for the first quarter of 2018.

The top lenders for the first quarter by product are:

Mortgage Category

#1 Winner:
Howard Bank

Personal Loans Category

#1 Winner:
First Midwest Bank

Top 3 Badge:
Lending Club
Upgrade

Business Loans Category

#1 Winner:
OnDeck

Auto Loans Category

#1 Winner:
iLendingDIRECT

Kabbage and Ingo Money Partner to Get Small Businesses their Loan Funds Faster (Small Business Trends) Rated: AAA

Kabbage and Ingo Money have teamed up to expedite the payout of loans into the accounts of small and medium-sized businesses in real time. The move is important news for small businesses in need of a fast loan payout to capitalize on new opportunities or continue operations.

Thanks to the new partnership, when businesses get a loan from Kabbage, the Ingo  Money technology will be used to deliver the funds to the applicant’s account right away. The loans are going to be paid out using Ingo Money’s push platform with push-payments-in-a-box technology.

The partnership was announced on pymnts.com at which time Kabbage President Kathryn Petralia explained the importance of accelerating the delivery of funds.

Strong Bank Earnings, The Copernican Revolution in Banking (PeerIQ), Rated: AAA

Goldman Sachs delivered its highest revenue in 3 years, also driven by a boost from its fixed income trading business. The bank continues to invest in Marcus and has originated $2.3 Bn in loans life-to-date and has $17 Bn in deposits. Marcus is only one part of GS’s broader lending strategy. We note in the slide below from GS’s earnings call that Goldman has substantially increased its loan book from $64 Bn at the end of 2016 to $81 Bn at the end of 2017 by expanding collateralized lending to high net-worth clients and securities-based lending.

Source: PeerIQ

Bank of America’s total revenue grew by 3.7% to $23.3 Bn driven by its Consumer business which saw profits grow by $0.8 Bn to $2.7 Bn, and 32 straight quarters of loan growth. Average loans increased by $22 Bn to $280 Bn driven by growth in mortgages and credit cards. Provision for credit losses increased by $97 Mn to $935 Mn, driven by credit card seasoning and loan growth. The net charge-off ratio increased slightly to 1.27%. Bank of America is the leader in mobile banking and active mobile banking users increased 12% YoY to 24.8 Mn.

 

DON’T FEAR THE ROBO! (All About Alpha) Rated: A

Technology advances have infiltrated every corner of finance, including the world of wealth management. While few can argue with the positives of automated, algorithm-based portfolio management platforms, the advent of the cost-efficient, dispassionate robo-advisor has struck fear into the heart of many a financial advisor and fund manager, who see these technology options as a threat to their business practice.

FIRST, WHAT ARE SOME BENEFITS OF A ROBO?

Lower fees. Most of these robo advisors charge less than 1%, with some south of .20%, versus the standard investment advisor fee range of 1-3% on a client’s portfolio.

Elimination of emotional trading. With a robo advisor executing a passively managed program, there is no chance of active management decision-making being affected by human emotional reaction to markets.

Index-like performance with tax efficiencies and global access. Most robo platforms feature ETFs that aim to produce results like an index, but with lower expense ratios than their equivalent counterparts found in mutual funds. For individuals focused on low cost but benchmark performance in a portfolio, a mix of ETFs can be a desirable option long term.

How Barclays US is using AI (Tearsheet) Rated: A

Barclays — the bank behind popular co-branded cards including Uber, American Airlines, JetBlue and a host of other retail partners — is using customer data to suggest products and understand the root causes of customer complaints. It’s an approach large banks like Capital One and JPMorgan Chase as well as startups like Credit Karma and MoneyLion are using to push insights and recommendations that are most relevant to the customer’s spending behavior and product preferences.

With all this data gathering, how do you avoid creeping out the customer?
We do a lot of testing, we are very thoughtful about products we develop and ways we communicate with customers. We don’t want to be in a situation where the customer is “creeped out”. We try to be very sensitive to that. We do a lot of data analysis and co-create experiences and products with customers to get a sense whether something will resonate or not. It’s an interesting time. It becomes straddling between convenience and relevance for the customer and going too far, [the sense of which] is different for each customer.

 

Lead Bank CEO: Tech, innovations help better clients, which makes a better bank (Kansas City Business Journal) Rated: A

Lead Bank CEO Josh Rowland is leaving no stone unturned on the technology front to help consumers gain financial strength and in turn create loyal, lifelong customers.

6th Avenue Capital Tips Off First “Merchant Madness” Promotion (AltFi), Rated: B

6th Avenue Capital, LLC (“6th Avenue Capital”) announced today the launch of its first “Merchant Madness” promotion. Throughout the month, and coinciding with the annual NCAA Men’s Basketball Tournament, 6th Avenue Capital will award points for all new ISOs, Merchant Cash Advance (MCA) submissions, approvals and funded deals.

In addition to the new Merchant Madness promotion, 6th Avenue Capital also recently announced competitive underwriting guidelines, buy rates and incentive programs for 2018.

United Kingdom

P2P lender RateSetter offers ISA investors £100 cash incentive (AltFi News) Rated: AAA

RateSetter is offering new investors up to £100 for opening a new Innovative Finance ISA with the p2p lending platform.

Lending Works set for further growth after passing £100m milestone (Financial & Business Insights) Rated: AAA

Peer-to-peer lender Lending Works has passed £100 million in terms of the amount of money lent, cementing its position as one of the biggest UK platforms of its type.

Some 20,000 customers – over 16,000 borrowers and nearly 4,000 lenders – have used the platform to date and every penny of capital and expected returns has been delivered to lenders on time.

Gone in 98 minutes! Blend Network sees surge in property loans (Peer2Peer Finance) Rated: A

A PEER-TO-PEER lending platform aiming to be “Goldman Sachs of P2P” has reached £2m of lending in less than four months, with its latest development loan getting backed within 98 minutes.

The platform launched in January and currently offers average returns of 12.11 per cent on property-backed development loans outside London.

A new challenge for business banking (Money Week) Rated: A

There are a few providers already in business. CountingUp is a new service that integrates a business account with automated bookkeeping. Income and expenses are automatically categorised, and it can produce profit-and-loss accounts, raise invoices and file taxes. Sole traders will pay £9.95 a month; limited companies £19.95. Cash can be deposited via the Post Office for a £1 fee or via Paypoint for a 2.5% commission. Cash withdrawals cost £1.

Also in the works is CivilisedBank, which gained its banking licence in May last year, but released it earlier this month to give itself more time to develop its technology platform. CivilisedBank proposes a branch-free service for more established companies, and will focus on customer service by employing up to 80 “local bankers” for businesses with a turnover of more than £1m. It hopes to provide savings, loans, current accounts with overdrafts, and foreign exchange. It will also offer savings products to non-business customers.

Meet Andrea Linehan, commercial director with Grid Finance… (Business Irish) Rated: A

The recent warning that banks are no longer making the effort to get to know small- and medium-sized businesses when they apply for a loan, struck a chord with Andrea Linehan.

Linehan, the commercial director with Grid Finance, is keen to stress that Grid’s model is much more business friendly, with staff around the country eager to dig into the fine details of a business hungry for capital.

China

LexinFintech to Invest RMB1 Billion in Partner Cooperation over Next Three Years (Benzinga) Rated: AAA

LexinFintech Holdings Ltd. (“Lexin” or the “Company”) (NASDAQ:LX) announced that it expects to invest RMB1 billion in cooperation with its partners over the next three years, to better serve its customers and to expand the use of credit services.

European Union

TransUnion expands into Europe with $ 1.4 billion Callcredit deal (Reuters) Rated: AAA

U.S. credit reporting agency TransUnion (TRU.N) on Friday said it will buy UK consumer data provider Callcredit for 1 billion pounds ($1.4 billion) from private equity firm GTCR, expanding its operations into Europe for the first time.

The deal comes at a time when credit-checking services are growing, in response to the proliferation of non-traditional lenders to consumers, such as payday loan providers and online lenders.

Fintech in Germany (Lexology) Rated: AAA

As the largest economy in the European Economic Area, the German market offers many opportunities for fintech innovation. Although some of the initial disruptive energy has been mitigated by regulatory challenges and a soft trend towards consolidation, a second phase of solid and mature business development is on the horizon.

Important players in the market include:

  • N26 – an app-based direct bank;
  • Kreditech – offers data-based bank lending;
  • Raisin – offers a pan-European marketplace for savings products;
  • Spotcap – offers loans for small and medium-sized enterprises;
  • Auxmoney – operates an online platform for peer-to-peer money lending services;
  • Smava – offers a loan comparison platform;
  • Liqid and Scalable – both offer online portfolio management to retail customers;
  • Exporo – offers an equity crowdfunding platform for real estate investment and bitbond, a bitcoin-based peer-to-peer lending platform; and
  • Finleap – while not a fintech company itself, it offers a fintech company builder ecosystem.
International

SPRING MEETINGS 2018 GLOBAL VOICES: INTERVIEW WITH IMAD MALHAS (World Bank Live) Rated: A

As part of our Spring Meetings 2018 Interview Series, we will be talking with Imad Malhas, ​CEO, IrisGuard, on how technology can help in the financial inclusion of displaced people.

Australia

“It was clear the loan products for small businesses were just not good enough,” says Moshal. He, and joint CEO Beau Bertoli, 34, set out to solve that problem in 2011 with Prospa, their Sydney-based online lender. Last year, Prospa provided over A$500m (£273m) in small-business loans, which are funded by bundling the loans together and selling them on to institutional investors. Interest rates start at around 12%, stretching into the mid-20s depending on risk.

Prospa’s draw is its speed in processing applications, with funding coming the same day. “We aren’t necessarily cheaper than a bank, but we offer speed, convenience and more access to credit,” says Bertoli. A A$25m funding round last year valued the business at A$235m, and the lender is now testing the waters for a stockmarket listing.

India

SoftBank-backed fintech firm True Balance raises $ 23m bridge round (Deal Street Asia) Rated: AAA

Gurgaon-based digital payments firm True Balance has reportedly raised $23 million in a bridge round from a clutch of foreign institutional investors.

According to a report in The Economic Times, Japan-based Line Ventures Corporation, Korean search engine Naver, Korean lender Shinhan Bank, TS Investment and other investors participated in this latest round.

P2P Lending Vs Stock Markets: The ideal Investment for you (Money Control) Rated: AAA

Investment in Financial Assets has been increasing in India. High return assets such as stocks and Peer to Peer (P2P) lending are increasingly sought after by investors.

It depends on the knowledge and risk profile of the person. While P2P lending is simple, stocks are pretty complex and require a lot of knowledge. However, both have the potential to provide good returns.

Indian households tend to have the highest savings in the world – at about 30 percent of income. Surprisingly, this does not translate into investments in the same proportion. Only about 3.2 crore people invest in the country’s stock markets – that is less than 3 percent of the population.

Africa

Using Psychometry In Its Loan Disbursement Process, Nigeria’s P2P Lender KiaKia Is Bringing Down The Loan Default Rate (Wee Tracker) Rated: AAA

Although news reports from the Q4 2017 show that banks are increasingly becoming open to lending more money even as lenders are expected to loosen credit scoring criteria in Q1 2018, they recorded an 8 percent increase in bad loans recorded in 2017.

Indeed the market is vast for Kiakia and other competing online loan services. Statistics from Nigeria interbank settlement system shows that there are over 31 million verified bank accounts in Nigerian banks.

For Kiakia about 75% of this number has never accessed any form of consumer or business credit from any financial institutions.

Asia

Robo-advisors offer low-cost growth opportunities, says GlobalData (Fintech Finance) Rated: A

Nomura Asset Management, a wholly owned subsidiary of Japan-based Nomura Holdings, has recently agreed to buy majority stake in Tokyo-based robo-advisory services provider 8 Securities Inc and a minority stake in Hong Kong headquartered parent company 8 Limited for JPY2.7bn ($25m). Expect major international asset managers to build similar distribution channels via the purchase of other established robo-advice FinTechs, says leading data and analytics company GlobalData.

Compared to most robo-advisers, 8 Securities has been in the market for a while. Chloe, its robo-advice platform, was the first in Asia to be offered via a mobile app and it currently has a presence in Hong Kong and Japan.

Latin America

Brazil Fintech Nubank Launches Facial Biometrics “AccessoBio” (Crowdfund Insider) Rated: AAA

Brazilian fintech startup Nubank announced earlier this week the launch of its new facial biometrics feature, AccessoBio. According to various reports, the fintech firm will now use the AccessoBio tool to help prevent identity fraud in credit card transactions.

ZDNet noted that Nubank believes the introduction of biometrics to its technology is a positive for customers due to the fact it does improve the mobile-based experience around the credit card requests and reduces the possibility of false rejects while reducing identity fraud possibility.

Authors:

George Popescu
Allen Taylor

German Alternative Lending Market: An Overview

alternative finance

Post 2008, Peer-2-Peer lending has enjoyed a rapid rise all across the world. Quick accessibility to funds, easy processing and less paperwork means it has became the preferred choice for individuals and SMEs. The global P2P lending market was valued at US$26 billion in 2015 and is projected to reach US$460 billion by 2022; it […]

alternative finance

Post 2008, Peer-2-Peer lending has enjoyed a rapid rise all across the world. Quick accessibility to funds, easy processing and less paperwork means it has became the preferred choice for individuals and SMEs. The global P2P lending market was valued at US$26 billion in 2015 and is projected to reach US$460 billion by 2022; it is growing at a compound annual growth rate of 51.5% from 2016 to 2022, according to Research and Markets. North America is the largest P2P market in the world followed by Europe.

In 2015, the European alternative finance market grew by 92% to €5.4 billion.Though the UK is head and shoulders above the rest of Europe (representing 81% of the overall market in 2015 with a volume of €4.4 billion), continental Europe is rapidly catching up. Leading the charge for the rest of Europe are France, Germany, and Sweden.The combined market volume of the 3 countries was estimated close to 461.5 million Euros, representing roughly 74% of continental Europe’s P2P market.

Germany’s Alternative Lending Market

Post-Brexit, continental Europe has been in a frenzy as they try to attract beleaguered London-based fintech companies to establish a presence in their respective countries. Germany is trying to dethrone France from the top spot as the biggest alternative lending market in continental Europe. From 2013 to 2015, Germany’s alternative finance market volume increased from a meager €65 million to a healthy €249 million.

Source:

Most popular P2P Models

  • Peer 2 Peer consumer-lending – The most promising and fast growing model has been the consumer-lending model. From 2013-2015, this model has witnessed an average annual growth of 95%.
  • Peer 2 Peer business lending – Booming export-oriented economy and growing number of SMEs has allowed this model to witness significant growth in recent years.It grew by almost seven times in a span of one year, from a paltry €6.1 million in 2014 the transaction volume increased to € 48.2 million in 2015.
  • Equity-based crowdfunding – This is one P2P model that has endured quite a rough time lately and regulatory unrest has been the chief reason. This led to a fall from € 29.8 million in 2014 to €17.3 million in 2015.
Source:

Germany’s P2P Regulatory Environment

Though Germany is one of the biggest EU credit markets, the country has only very recently seen a surge in the alternative lending segment. The biggest factor for its slow growth stems from the stern and complex regulatory framework. Under German law (‘Kreditwesengesetz’), only banks may originate loans. To comply with this regulation, each P2P lending service has to partner with a bank that formally originates the loan and right away has to sell the rights to proceeds to the investors via the platform. This requires a complex legal (and technical) structure in which no direct contractual relationship is forged between the investor and borrower. This has also led to Germany’s P2P players being absent from the secondary loan market.

Apart from this, another challenge P2P players face is competition from traditional banks in terms of interest rates offered for unsecured installment loans. Currently, the monthly average real interest rate varies between 5.62% and 6.06 % p.a. in 2017. This hardly leaves any room for P2P lenders to compete with the banks. Use of credit cards is not as prominent as in the US or UK, so there is less opportunity to do high-interest refinancing.

But having said that, since the post-2008 financial crisis, traditional banks have lost public trust, and customers are now open to trying other financing alternatives. The rise of millennials and their reliance on smartphones and tablets is another reason the P2P market is beginning to thrive in Germany.

Leading P2P lenders in Germany

  • Auxmoney – A financial services company that provides an online peer-to-peer loan marketplace. It has raised $198 million in various rounds of funding. It is the largest P2P platform in the country. As of January 31st, 2016, the company had originated 441 million EUR in loans since launch with a monthly loan origination volume of 10.6M. It was founded by Philip Kamp, Raffael Johnen, and Philipp Kriependorf. It offer loans up to €25,000 with loan terms ranging from 12 to 60 months. They assign a proprietary credit score to each borrower and the rate of interest is based on that score.
  • Lendico – Founded in December 2013 by the incubator and venture capitalist Rocket Internet. Lendico is a multinational company that operates a peer-to-peer lending platform. The platform links lenders and borrowers with interest rates starting at 2.99 percent. Loans are available to borrowers for amounts between $1,360 and $34,000. Loan terms range from 6 months to 60 months. It also allows German investors to lend cross-border via Spanish loan listings. Arrowgrass Capital acquired it in July this year. It also operates in Spain, the Netherlands, Austria, Poland, and South Africa.
  • Zencap – Founded in 2014 by Dr. Matthias Knecht and Christian Grobe. Zencap used to offer business loans of up to €250,000 for durations ranging from 6 months to 60 months, and at the end of 2015 it was acquired by UK-based Funding Circle. Since inception, it has originated loans worth €66 million (approx).
  • SpotCap – Founded in 2014 by Jens Woloszczak and is based in Berlin. Rocket Internet backed Spotcap offers online business loans to companies in Spain, the Netherlands, the UK, and Australia. It has secured over €100 million in funding in various rounds. It has a high-profile list of investors that includes Rocket Internet, Access Industries, Holtzbrinck Ventures, Kreos Capital, Finstar Financial Group, and Heartland Bank.
  • Smava – Smava GmbH is a Berlin-based credit broker and founded by Alexander Artope. Since its launch in 2007, more than 15,000 investors and 6,000 borrowers have done business with each other through the smava.de credit market. It has raised almost $67 million in funding.
  • Main Funders – Commerzbank also launched its own P2P platform last year under the name Main Funders. It offers SME loans ranging from EUR 200 thousand to EUR 10 million for a maximum period of 5 years. Main Funders charges 0.45% of the loan amount from the borrowers and charges 0.2% from investors.

Apart from this, players from other countries are beginning to show interest in the German market. Recently, Finnish P2P credit marketplace Fellow Finance collaborated with Wirecard AG to offer loans to consumers in Germany. Likewise Advanon, a Switzerland-based P2P player, has started operating in the German market as well.

Conclusion

Even though the German fintech market is still in its infancy, the size of the economy makes it extremely lucrative. Considering it is one of the largest markets in EU, it is quite ironical that it is still untapped. But online lenders now seem to be focusing on Germany and are aggressively investing to lure borrowers. It is safe to say that the next few years will be very interesting for the German alternative lending market.

Author:

Written by Heena Dhir.

Monday October 3rd 2016, Daily News Digest

Monday October 3rd 2016, Daily News Digest

News Comments Today’s main news: Smava raises $34m; Lenddo partners with FICO in India. Today’s main analysis : PeerIQ’s analysis of securitization and pricing. Today’s thought-provoking articles: Blackston’s “now is the most difficult period ever“. Lendup has 29% of non-performing-loans. United States Amazing info and data from PeerIQ on the securitization market and loan pricing. […]

Monday October 3rd 2016, Daily News Digest

News Comments

United States

United Kingdom

European Union

China

India

 

United States

Weekly Industry update from PeerIQ, (PeerIQ email), Rated: A

Several marketplace lending ABS deals are coming to market amidst favorable market conditions and impeding risk retention rules.
P2P Global Investments, a UK UCIT investing in marketplace lending loans, sold £114 M ($167.36 MM) of rated notes backed by Zopa loans. The senior bond of the deal—Marketplace Originated Consumer Assets (MOCA 2016-1)—was rated Aa3/AA by Moody’s and Fitch respectively.
Noteworthy is that the deal is the highest rating afforded to any marketplace lending transaction from Fitch. Moody’s assigned a cumulative loss estimate of 7% and expected recoveries of 5%. We show deal structure and pricing below:
The MCOA 2016-1 senior bond priced 75 bps better than April SBOLT 2016-1 deal consisting of Funding Circle loans. Investors noted the quality of the data as a factor explaining the price difference as well as market conditions. PeerIQ also notes the substantial variation in agency provided cumulative loss and recovery estimates on SBOLT 2016-1 in our PeerIQ expects this trend to grow particularly as originators incentivize contributed collateral “club deals” to achieve standardization while also providing a quarterly path to liquidity for whole loan investors.
Sophisticated loan-level analytics are required to accurately value seasoned loans contributed to the collateral pool. Aged portfolios offer greater clarity to loan performance. However, there are other analytical considerations. The average conditional default rates (CDRs) are lower in the first twelve months of consumer loan pool than CDRs in the pool seasoned beyond twelve months. Therefore, seasoned unsecured consumer loans pool tend to have higher cumulative net losses as a percentage of deal balance. As the loans season, the conditional prepayment rates (CPR) tend to be elevated as well.
The price of a seasoned loan is the present value of projected loss-adjusted cashflow for the remaining balance of the loan, discounted at an appropriate rate. We show below the price behavior of a typical 60-month loan over its life while holding the discount factor constant:
As losses ramp up, the loan price drops; and then price exceeds par as risky loans approach maturity. This behavior results from positive survival bias of a loan given its remaining principal balance.
Specifically, in the early life of a loan, the credit loss projection ramps up and dominates the loan coupon—the loan price drops below par. As the loan seasons and survives over time, the credit risk on the remaining principal balance decreases. This survival bias of the credit risk profile leads to certain high credit risk loans valued above par.
For a higher coupon loan, the interest return or carry of the loan dominates loan pricing—the loan price exceeds par. At maturity, if the loan has not experienced any credit impairment, the price of the loan will be par; this leads to a “pull-to-par” profile.

Securitization Tracker Update
We look forward to releasing the Q3 securitization tracker this week. As origination volumes have slowed in certain areas, and as ABS markets started with a slow Q1, readers are asking what is the state of the ABS market? You may be surprised.

Stay tuned as we share volumes, pricings, and our outlook this week.

Funding Circle CEO says it’s a ‘golden age’ for marketplace lending as revenue jumps 144%, (Business Insider), Rated: AAA

The CEO of marketplace lender Funding Circle says the industry is going through a “golden age” despite troubles for platforms like Lending Club this year.

Funding Circle is the UK’s biggest marketplace lender, worth over $1 billion.

Funding Circle CEO Samir Desai told Business Insider: “It was certainly a tough first half of the year with various things going on with Lending Club, which caused investors to take another look, and then the stuff with Brexit. But actually, what I’ve always said is I think we’re in this golden age for our industry.”

So why does Desai think we’re in a golden age? “If you look at the net returns that have been generated by marketplace lending platforms, they have been the highest of any asset class over the last 5 years with the lowest levels of volatility. If you look on the borrower side, borrowers flock in their droves to this kind of customer experience.

Here are the key numbers from 2015:

  • Loan origination up 132% to £727 million;
  • Revenue up 144% to £31.9 million;
  • Loss up 114% to £36.9 million;
  • Loss margin reduced from 132% to 116%.

Funding Circle acquired Zencap last year, a deal that took the peer-to-peer lending platform into Germany, Spain, and the Netherlands.

As a result, Funding Circle doesn’t expect to make a profit this year. As I pointed out recently, the UK’s two biggest marketplace lenders — Funding Circle and Zopa — have lost a combined £50 million over the last decade and Funding Circle has yet to make a profit.

Funding Circle raised £97 million in April last year, taking its total funding to over £200 million.

Le Luel, Funding Circle’s chief risk officer, recently shared the fact that the company dialled back loan volumes in the US after loan performance went off track.

“There are periods where we will bring down origination if we’re not happy about things, that’s a key part of our business model.”

Orchard Weekly Report, (Orchard Platform), Rated: A

Blackstone’s Top Dealmaker Says Now Is The Most Difficult Period He’s Ever Experienced, (Bloomberg), Rated: A

“For any professional investor, this is the most difficult period we’ve ever experienced,” Baratta, Blackstone’s global head of private equity, said Tuesday, speaking at the WSJ Pro Private Equity Analyst Conference in New York. “You have historically high multiples of cash flows, low yields. I’ve never seen it in my career. It’s the most treacherous moment.”

The firm is still selling more assets than it’s buying, according to President Tony James.

Blackstone finished gathering $18 billion for its latest private equity fund last year. The firm also has an energy private equity vehicle, which finished raising $4.5 billion last year.

Blackstone, founded by Schwarzman and Peter G. Peterson in 1985, managed $356 billion in private equity holdings, real estate, credit assets and hedge funds as of June 30.

Fintech Upstart LendUp Fined by CFPB, California Regulator, (Wall Street Journal), Rated: A

LendUp extended nearly 75,200 installment loans in California last year, up about 110% from a year prior, according to the California DBO. The amount lent out on these loans last year surpassed $22 million, up 225%.

Missed payments are also high. Some 29%, or 5,921, of the unsecured installment loans outstanding at the end of last year were 30 or more days past due, according to a report from the California DBO.

United Kingdom

Landbay follows Zoopla pairing with new rental comparison tool, (BDaily), Rated: A

Peer-to-peer (P2P) lending platform Landbay has launched a new comparison tool that will help tenants and landlords to compare their rents against the prevailing market rate as rental values continue to spiral.

The ‘Rent Check’ facility, which has launched today (Monday), utilises data from the P2P lender’s monthly rental index and allows users to compare rental movements for specific property types to check that rents are tracking the wider market.

“Together, Landbay’s Rental Index and the Rent Check tool will give both tenants and landlords a simple way of accessing data from across the UK, not only providing an in depth view of the market, but helping inform their next move.”

Zoopla invested £500k in the startup earlier in the year which guaranteed it exclusivity for new Landbay products that will be rolled out across its network of property websites Zoopla and PrimeLocation.com.

European Union

Smava clinches $ 34m in Series C, (AltFi), Rated: AAA

Smava, a leading marketplace lender in Germany, has clinched $34m in a round led by Runa Capital, with additional participation from Verdane Capital, mojo.capital and a gaggle of existing investors. Runa is an active investor in the alternative finance sector, having already invested in consumer lender Zopa and gateway platforms Lending Robot and Lendio. Verdane is a Scandinavian private equity firm with a track record of investing across the consumer internet space.

Alexander Artopé, CEO and co-founder of smava, said that the $34m will allow the company to expand its customer base, hire additional talent and to enhance its credit scoring technology.

Paschi Said Nearing Deal for Sale of Bad-Loans Platform, (Bloomberg), Rated: A

Investors including Cerved Credit Management SpA and a venture between KKR & Co. and Varde Partners LP submitted non-binding offers on Friday for Banca Monte dei Paschi di Siena SpA’s non-performing loans platform, according to people with knowledge of the matter.

As part of the deal, the lender will also transfer management of an 8.6-billion euro ($9.6 billion) loan portfolio to the platform’s buyer, along with the exclusive management of a portion of Monte Paschi’s future bad loans, the people said, asking not to be identified because the process is private. Monte Paschi, which is being advised by Mediobanca SpA, plans to complete the sale by the end of the year, the people said.

China

No bail-outs in shadow banking, warns China regulator, (Financial Review), Rated: A

China’s banking regulator has indicated that the government would not bail out failed firms in the shadow banking sector despite a string of recent collapses which have triggered protests across the country from disgruntled investors.

Wang Shengbang, a senior official at the China Banking Regulatory Commission, said investors putting their savings into high-yield debt products should be aware of the risks.

Among the most troubled have been peer-to-peer (P2P) online lending platforms. The collapsed Ezubao, which raised more than 74 billion yuan ($A14.5 billion) from nearly a million investors across the country, is being investigated over claims it ran a Ponzi scheme. Some 21 people from the P2P firm were arrested earlier this year.

He said only around 17 per cent of shadow banking products, or around 3.2 trillion yuan ($A640 billion) were held in riskier high-yield products, which is around 1.5 per cent of China’s overall banking assets.

In a recent report, Moody’s said P2P lending did “not pose systemic risks given its small size” at about 1 per cent of total shadow banking assets.

Liu Li-Gang, chief China economist at Citi, said while (NPLs) were higher than official figures indicate, the level was still manageable.

India

FICO and Lenddo Partner to Extend Credit Reach in India, (PR Newswire), Rated: A

FICO, the world leader in credit scoring, has today announced a new partnership with Lenddo, a specialist in credit and verification technologies. Together, the companies plan to develop a credit risk score for consumers in India who have a limited or no formal credit history.

Lenddo was founded in 2011 to improve financial inclusion for 1 billion people around the world, enabling financial service providers to access and serve new and underserved markets using its disruptive technology and leveraging new sources of digital data, such as mobile-social digital footprints.

Author:

George Popescu