What’s Up at Collateral?

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Update Feb 28th, 10:50pm: according to a message recieved by affected investors, Collateral (UK) Ltd is going into administration

Or rather, why is Collateral down? A question concerned investors have been speculating on for over 36 hours now, since the website of UK p2p lending platform Collateral went down around 7pm two days ago and is showing a maintenance message. Investors criticize that there was no pre-announcement of this maintenance and worse that Collateral seemed to have ceased all communications to investors and did not react to any phone or email messages.

With no communications from the platform whatsoever investors wondered what to do. Some investors reported the incident to ActionFraud squad of the police while another contacted the FCA to voice his concern and seek advice.

This morning Collateral sent out this email to investors: ‘An update is being prepared and will be emailed to all lenders later today. Thanks for your patience, The Collateral Team‘.

So while at the time of writing of this article it is unclear what’s up at Collateral, this event does present two general questions in my view:

1) How should a p2p lending platform communicate in a crisis?

In my view not communicating at all is the worst choice. As investors pointed out, even if the nature of the crisis prevented communication through own website or email, then the platform could have elected to leave a message via the Twitter or Facebook channel. While that would have not reached all investors, it would have been better than silence.

2) What can concerned investors actually do to react, if the platform is seemingly unreachable/unresponding over a longer period of time?

The discussions amongst investors show great frustration on this point. And the questions is, how helpful any of the discussed measures really would be. The main suggestions were trying alternative phone contacts (calling management directly), visiting office in person, reporting to authorities (police, FCA), alerting the press.

From this incident I would say there is little investors can do to force an immediate reaction.

Regardless what was happening and what the outcome will be, my opinion is that this will tarnish the reputation of Collateral and that investors might try to withdraw (part) of their funds, once the platform is operational again.

Collateral maintenace message

Mintos Adds First Loan Originator From the UK

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P2P lending marketplace Mintos has added 1pm as new loan originator on the platform. 1pm is an FCA accredited non-bank finance provider which is publicly listed on the AIM market on the London Stock Exchange. The company provides various loan types to SMEs in Britain. On Mintos 1pm offers business loans for investment in GBP, with an interest rate of up to 11%.

1pm was founded in 2000 and listed on the London Stock Exchange in 2006. The company is dedicated to helping the United Kingdom’s economy grow by providing finance to businesses. It offers many finance solutions to SMEs within the United Kingdom including asset and vehicle finance, hire purchase, commercial loans and invoice financing.

1pm currently operates from eight sites across the United Kingdom. The company employs 170 people and has more than 16,000 small businesses as clients.

“An important part of our strategic growth plan is to harness the benefits of financial technology. By joining the Mintos marketplace, we will now be able to accelerate the amount of loans that are originated by our business and to access retail global investors efficiently, a funding source that would be unavailable to us without this digital capability,” says CEO of 1pm plc Ian Smith.

1pm business loans from the United Kingdom on Mintos range from GBP 3 000 to 50 000. The repayment period is from 3 months to 5 years. .

1pm has a total lease, loan and invoice finance portfolio of GBP 130 million. The interim financial results for the six-month period that ended on 30 November 2017 for 1pm plc showed the group’s revenue increased by 74% to GBP 13.9 million. Profit before tax for the group increased by 77% to GBP 3.6 million.

“The United Kingdom has one of the largest alternative finance markets in the world. We are very excited to have expanded Mintos into this geography by launching 1pm on the marketplace. The company is a great addition and offers investors on Mintos a new geography and further opportunities in GBP investments. We look forward to this partnership with 1pm and to seeing further partnerships arise in this market,” says Martins Sulte, CEO and Co-founder of Mintos.

ING Diba Buys Lendico

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Bank ING Diba acquires p2p lending marketplace Lendico. According to Finanz-Szene.de the transaction was reported to the German Federal Cartel Authority last week. The bank has confirmed the acquisition.

Lendico went through hard times. It had to cut back on international activities, never really took off on German home turf and realigned from consumer lending to SME lending. Last year the majority stake was sold from Rocket Internet to Arrowgrass.

Speculation is that the bank acquired Lendico in a make or buy decision to save development time for an own platform, which could have taken over a year. While the price of the acquisition was not disclosed, I suspect Lendico could have come cheap, considering the lingering of the business in the past years.

Ratesetter Launches IFISA Offer

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Ratesetter announced it will launch the IFISA product offer tomorrow. The Ratesetter ISA will initially be available to existing customers, then to new customers on 1 March and to inward transfers from other ISAs in April.

Key features of the Ratesetter ISA:

  • Average interest rates are 3% to 6% p.a. depending on level of access.
  • Ratesetter says it takes less than five minutes to open a Ratesetter account online.
  • All investors are automatically covered by Ratesetter’s Provision Fund which manages and diversifies risk, meaning investors do not need to choose specific loans. The Provision Fund has ensured that, to date, every individual Ratesetter investor has received their capital and interest in full. Lending on Ratesetter is an investment and capital is at risk.
  • The Ratesetter ISA is a flexible ISA. Investors can withdraw money and replace it later in the same tax year without losing their tax-free allowance.

Ratesetter’s CEO and founder, Rhydian Lewis OBE, told P2P-Banking:

‘RateSetter’s purpose is to give people the opportunity to earn more on their money. Our ISA makes that opportunity even more compelling because investing is now tax-free.

 Cash ISA savers are frustrated with low interest rates, while inflation is always nibbling away at their money. Stocks & Shares ISA investors have enjoyed good returns recently but may be nervous of market falls, as demonstrated in the last few days. Lending is a third asset class in the middle, offering the potential for higher returns than cash without the volatility of shares.

 With RateSetter’s excellent track record and our focus on the retail investor, we believe our ISA will become an attractive home for people looking to put their money to work.’

For more Innovative Finance ISA products see the large P2P-Banking IFISA comparison table.

Banco BNI Europe Starts to Lend on Multiple P2P Lending Platforms

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Banco BNI Europa was launched in July 2014 as a digital-only bank in Portugal. Banco BNI Europa says it aims to challenge the traditional banking sector through strategic partnerships with fast-moving fintech businesses to launch new products allowing the use of the most advanced technology in terms of risk analysis, consumer experience and rapid entry into the market.

Today Banco BNI Europe announced it will start lending on Fellow Finance.

‘Modern banks expand and grow by partnerships. Fellow Finance enables and offers an easy access to invest and lend in Nordic and Central European consumer and SME loans through its platform. Through their investment account at Fellow Finance, Banco BNI Europa is able to diversify their balance sheet investment into Finnish and German loans easily and cost-effectively. This is an example that banks don’t need to set up their own expensive operations on ground but can effectively enter markets through marketplace lending platforms. It is also an example how banks can also utilize the presence of FinTech among their core business’ says Jouni Hintikka, the CEO of Fellow Finance.

‘Investing via Fellow Finance in consumer and SME loans offers us a great opportunity to easily expand our operations and we are very satisfied with the analytical and professional approach of Fellow Finance in credit intermediation’ echoes Pedro Pinto Coelho, Executive Chairman of Banco BNI Europa.

Last week BNI Europe announced it will fund German SME loans through Funding Circle. According to Pedro Pinto Coelho, Executive Chairman of Banco BNI Europa, ‘an investment in German SME – the staple of European economic stability – is a highly attractive asset class. And Funding Circle is the professional partner that convinced us with their risk assessment and credit analysis. …’.

To date Banco BNI Europa has struck fourteen fintech partnerships with European fintech leaders across the continent. The bank had 141 per cent growth by the end of 2017 taking its total assets above €500m, and cited its focus on ‘innovative products’ as an explanation for the improved performance.

International P2P Lending Volumes January 2018

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The table lists the loan originations of p2p lending marketplaces for last month. Funding Circle leads ahead of Zopa and Ratesetter. The total volume for the reported marketplaces adds up to 564 million Euro. I track the development of p2p lending volumes for many markets. Since I already have most of the data on file, I can publish statistics on the monthly loan originations for selected p2p lending platforms.

This month I added Linked Finance.

Zopa crossed the milestone of 3 billion GBP originated since launch.

Investors living in national markets with no or limited selection of local p2p lending services can check this list of international investing on p2p lending services. Investors can also explore how to make use of current p2p lending cashback offers available. UK investors can compare IFISA rates.

P2P Lending Volume 01/2018
Table: P2P Lending Volumes in January 2018. Source: own research

Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.
*Prosper and Lending Club no longer publish origination data for the most recent month.

Notice to p2p lending services not listed: Continue reading →