thincats

Thin Cats Calls it a Day For Retail Investors – Puts Loans in Run-Off

wiseclerk 3 Comments

British p2p lending marketplace Thin Cats* announced that it will cease to offer new loans to retail investors. Thin Cats had facilitated about 556 million loans to UK business clients on its marketplace.

UPDATE: The headline has been edited compared to an earlier version to clarify that the company only stopped to offer retail p2p loans. This confusion resulted from the fact that the announcement below made no mention that the company will focus on institutional clients in future.

The Thin Cats announcement reads:

You have probably noticed that the number of new loans for investment
on the P2P platform operated by Business Loan Network Limited (BLN),
one of the ThinCats Group companies, has fallen significantly over the
last two years.

Following a thorough review, we have concluded it is no longer cost
effective and practicable to raise funds in this way, so have decided to
close the P2P platform to new business and initiate a run-off process
for existing investors.

This proposal has been discussed with the Financial Conduct Authority
(FCA) and we have made a voluntary request to the FCA that the
permissions to operate an electronic platform be closed to new business.

Our decision to initiate the ThinCats P2P Platform run-off has had the
following impacts which became effective at 12.01am on 9 December 2019.

No new loans will be offered on the ThinCats P2P Platform
The secondary market has closed and any loan parts listed for sale at the time of closure have been cancelled
No new accounts, including ISA accounts, can be opened
No new lender deposits can be accepted

Please note that investors can continue to log in to their account(s) in
the usual way until such time as their account closes as part of the
run-off process.

Crucially all of our existing systems and controls will remain in place
to ensure investors’ interest and capital is collected when due or
otherwise actively recovered. Investors can continue to withdraw any
cash balances to their nominated bank account following the usual lender
withdrawal request process. It is no longer possible to add new funds
to your account(s), although loan repayments collected on your behalf
will continue in the normal way.

The effect on different categories of investor is detailed below:

1. Lenders holding performing loans

Lenders with status “A” loans that are performing as expected will
continue to receive interest and capital repayments in line with the
original loan schedule. We would encourage you to withdraw your cash
balances periodically.

Following the closure of the secondary market, you can no longer buy or
sell any loan parts and any loan parts currently listed for sale will be
cancelled.

For any performing loans that may subsequently become non-performing, these will be treated as described in section 2 below.

2. Lenders holding non-performing loans

For lenders with loans that are not performing in line with the original
loan schedule, we will continue to endeavour to maximise the returns to
lenders through our normal monitoring and recovery process. There will
be no additional impact from the introduction of a run-off period and we
will continue to email you with updates on specific non-performing
loans.

Once we have secured the maximum value from non-performing loans,
lenders will be asked to withdraw any remaining cash balances and close
their account.

3. Investors in Diversified Loan Portfolios (DLPs)

DLPs have a minimum Target Term, typically two years, during which it is
not possible to sell underlying loan parts. Following the closure of
the secondary market, performing loans within DLPs will no longer be
offered for sale via the secondary market towards the end of the Target
Term. Payments from these loans will, instead, continue until the loan
matures.

We will contact you separately with the proposed run off schedule for
each DLP that you hold and you will continue to receive DLP statements
on a quarterly basis.

Any non-performing loans within a DLP will be treated as described in section 2 above.

4. Registered investors with funded accounts but not holding loan parts

For investors that have cash balances in their ThinCats account(s) but
do not hold any loan parts, we encourage you to withdraw your cash to
your nominated bank account as soon as possible in the usual manner.

Once your account has a zero balance we will close your account. If you
do not withdraw any remaining cash balances, we will contact you again
to remind you of the need to transfer all monies out of your account.

5. ISAs

If you hold a loan or DLP within a ThinCats ISA, we will contact you
separately with details of the options open to you. It is no longer
possible to open a ThinCats ISA for the current tax year.

6. ThinCats Lending Clubs (“TLC”)

All TLCs have now come to the end of their term and those that remain
open are still to receive future realisations from non-performing loans
in each portfolio.

Once all possible realisations have been achieved the respective TLC will be closed and you will be notified accordingly.

In summary

The main impact of the platform run-off process is that no new loans
will be offered on the ThinCats P2P Platform and it is no longer
possible to open a new account.

In most other aspects, other than the closing of the secondary market,
the platform will continue very much as now: you will continue to
receive interest and capital repayments for performing loans and we will
continue to monitor loans and invoke recovery procedures in the normal
way. You will be able to log in to your account in exactly the same way.

We are committed to treating all customers fairly during the run-off
process and recognise it may raise a number of questions with investors.

P2P Lending Experiences of a British Expat Living in the Eurozone

Guest 5 Comments

This is a guest post by British investor ‘JamesFrance‘.

Since retiring and leaving the UK to live in a warmer dryer part of Europe, I fortunately found myself able to live on less than my income, so had the problem of how to best manage these savings, which I wanted to protect from inflation and if possible achieve a positive return on by some type of short term investment. Unfortunately I never found a British savings account which would accept money from non residents, so I was obliged to accept a very low interest rate from my existing UK bank. I do have other long term investments so was prepared to take some risk to achieve a better return.

I had seen articles in the British press about Peer to Peer lending, which tended to refer to the big three, Zopa, Ratesetter and Funding Circle, none of which were prepared to allow a non resident to open an account, so I soon forgot about that as a possibility.   In August 2013 I read that another P2P business lending platform, Thincats, was joining the P2P finance association. I decided to look at their website and was surprised to learn that they could accept non resident investors.

Thincats is really for those with larger amounts to invest, having a minimum bid of 1000 GBP per loan, so it is difficult to achieve adequate diversification for relatively small sums without using their syndicates, which I didn’t find interesting, so I took the plunge and made 10 loans.   Needing 1000 GBP per loan meant that after that it took me some time to accumulate enough for my next bid, so I had the problem of uninvested money not earning until my next loan drew down.   I also found that some loans were repaid early which was reducing my returns because of the drawdown delays.   I think this would be an ideal platform for those with large amounts to invest, as they have a good flow of loans, there is plenty of information about the borrowing companies and once their new website is launched the process should be much easier.   A minimum 25 GBP fee for selling a loan on the secondary market makes it expensive to sell smaller amounts, which means that after several repayments a sale would not be economic.

By this time I was finding other possibilities with the help of websites such as P2P-Banking.com, where I read about isePankur in Estonia, which has an English language version and seemed ideal for any spare Euros languishing in my Euro account and only earning a secure 1% interest. isePankur now renamed Bondora, has been quite exciting to invest through as there have been many changes to the auto bidding system since I started there in September 2013, so just as I became used to the way my chioices were working out, it was all change so I had to start again to think of a good strategy.   They have been expanding rapidly and now issue personal loans in 4 European markets.   The defaut rates for their Spanish and Slovakian loans have been very high, so I have been avoiding those areas since that became apparent, which means time consuming manual investment because the auto bid system no longer allows choice of country.   I do not sell overdue loans on the secondary market, so my returns on the platform will be completely dependent on the eventual recovery of the defaulted loans, which will only become apparent after a few years.   The interest rates are high so I have accepted the level of risk involved. Continue reading →