viventor

Hunger for Liquidity – State of P2P Lending in Times of the Coronavirus

wiseclerk 3 Comments

Not only the stock markets, but also the p2p lending sector is heavily impacted by the current coronavirus situation. In this article I’ll try to give an overview of what’s currently the situation.

I watched the Mintos* live webinar on the current situation for the past 90 minutes. Some screenshots of the slides shown are at the end of this post. About 800-900 Mintos investors were watching and I think they highly appreciated the time and effort Mintos took to communicate. CEO Martins Sulte spent over 45 minutes answering questions. And there are a lot of questions investors have in times like these.

My take is, that the biggest trend we saw in p2p lending in the past week is the hunger for liquidity. Both on the investor side as on the loan originator side (on those marketplaces that work with loan originators).

105 German investors participated in a poll I ran over the past two days. Of these

  • 11% say they increase their p2p lending investment, to buy and profit from loans that are available at (large) discounts on secondary markets
  • 3% say they are increasing their p2p lending investment for other reasons
  • 30% reinvest as usual
  • 26% are withdrawing money as the want to reallocate it to the stock money
  • 20% are withdrawing money as they think the risk is too high

So even in this small, non-representative poll nearly half the investors are saying they are withdrawing money.

How that impacts the p2p lending marketplaces can be observed exemplarily on Mintos* :

  • loans on offer rose and still rise sharply both on the primary market (900,000 loans) and on the secondary market (1.7 million loans)
  • as many investors scramble to exit, this is only possible for them if they offer extreme discounts on the secondary market (the highest discount for current loans on offer is currently -20.1%, resulting in YTMs of 30% and higher for the buyer)
  • Congruously the Invest&Access product of Mintos got very illiquid. Withdrawals are very delayed and partial.
  • The volume of newly financed loans on the primary market has tanked
  • Interest rates offered on the primary market rise (current maximum 21.1%, Mintos even had to adapt the range the slider in the UI could show), together with cashbacks on offer and there are also measures to tie in capital longer.

In the current situation most investors in the discussion seem to assume that elevated risks come by the potential inability of borrowers to repay the loans, due to economic downturn. That may well be, but would impact the yield mid- or long-term (weeks or months).
In my view there are two very short-term risks that many investors overlook:

  1. The currency risks for many Mintos loan originators: Many have issued loans to borrowers in weak currencies like RUB, KZT or GEL, but need to pay Mintos investors in EUR. The sharp change in exchange rates could pose major problems for the liquidity of the loan originators.
  2. Many loan originators were growing fast and required constant cashflow to finance their lending and operations as they were not yet profitable. Some were even leveraged. External refinancing might be very hard to impossible to obtain in current market conditions (see for example investors reaction on trading of the Mogo Finance bond). And as said the volume financed on Mintos primary market is slowing. Again this could pose liquidity problems to originators.

An industry insider I spoke to said he would expect at least 2-3 loan originators to fail short term. CEO Sulte acknowledged in answering the questions on the webinar that “not all” could be expected to make it in the current situation, pointing to the large number of loan originators active on Mintos.

The two cited short term problems are especially a concern on those p2p lending market places that operate with loan originators. Of course the investors are also withdrawing increased amounts on “classic” p2p lending marketplaces like Assetz Capital, Bondora, Ratesetter and Zopa, but this poses no short-term risks to the stability of these marketplaces in my view.

Other investors share this opinion, pointing to the different levels of discounts on different secondary market (for current loans: Mintos* -20.1%, Viventor* -6%, Iuvo* -5.7%, Finbee* -5%, Savy* -5%, Neofinance* -5%, Bondora* -3%)

The platforms have reacted by four ways: communication, temporarily suspending borrower repayment requirement (especially SME loans, e.g. Linked Finance, October, Neofinance* ), and stepping up marketing and increasing interest rates:

  • Bondora* runs a raffle for investors which can win a BMW, minimum investment 1 EUR required.
  • Lendermarket* has increased interest rates from 12 to 14% and offers 2% cashback for any investment increase
  • Twino* has increased interest rates to 14%
  • Swaper* increased interest rates to 14% (16% for VIP customers, 5K minimum required)
  • Robocash* increased interest rates to 14%
  • Estateguru* interest rates have increased slightly

Below are screenshots of some of the slides shown in the Mintos webinar today:

mintos corona

mintos corona

mintos corona

mintos corona questions

Two Issues Currently Evolving on P2P Lending Marketplaces

wiseclerk 26 Comments

This week some investors on the p2p lending marketplaces Viventor*, Grupeer* and Mintos* are affected by issues that hinder the normal procedures on these marketplaces.

Viventor started to display the following warning message yesterday (visible only if you click on an affected loan)

Aforti Viventor
(Screenshot from Viventor.com)

As a result, multiple Aforti loans were on offer on the secondary market for 5 to 15% discount (at one point in time I saw 35% discount)

Asked for a comment, Viventor CEO Andrius Bolsaitis told P2P-Banking.com:

According to information that we have now, they have some cash management issues, we are in discussions with them and hope to resolve the situation soon. I will be personally meeting with their managers tomorrow in Warsaw and will have more updates then.

Update 14:02: Apparently Mintos has now suspended trading of Aforti loans on the secondary market. I reached out this morning to Mintos’ management for a comment on how they see the situation with Aforti.

Update 14:42: Reply from Mintos CEO:

Hi … ,

Thank you for your email.Aforti is overdue on passing to Mintos payments which Aforti has received from borrowers and payment for buybacks. Thus, we are suspending repayments and buybacks. We are meeting Aforti tomorrow in Warsaw and will update investors accordingly. Below excerpt from communication to all investors:
Mintos has suspended automatic repayments and buybacks for loans originated by Aforti Finance on our marketplace (EUR and PLN).
The decision was made based on Aforti Finance’s overdue transfers of borrower’s payments to the Mintos marketplace.

In order to protect the interests of our investors, all loans issued by Aforti Finance have been removed from the primary and secondary markets of the Mintos marketplace. This means you cannot buy or sell Aforti Finance loans, effective immediately until further notice.

Update 16:02: Statement from Aforti Holding:

Dear Sir,

In response to the questions regarding the message released by Viventor, we would like to inform you following.

We are currently at the stage of closing cooperation with the Viventor platform, what has been announced to Viventor. Situation suggested by Viventor is a result  of  change in Aforti Finance S.A business strategy. Our decision is determined by technical difficulties in cooperation with  Viventor platform. Also cause most workload has to be done manually, our operational risk increased significantly. This is what we want to avoid, cause AFORTI business model and operational procedures are going rather in the direction of using API to automatize processes and to minimize human errors.

It’s also worth to add, that we have not been using  Viventor platform for new loans for about two last months, as a result of mentioned above decision. Of course Viventor receives daily financial transfers, so we do not see any reason for such a message.

Due to the fact that for tomorrow (Thursday, August the 8th ) we have scheduled a meeting with the Viventor, we believe all misunderstandings will be clarified.

Update Aug. 8th: the meetings are at 12:00/13:00 (Warsaw time)

Update Aug. 8th: Debitum Network* says investors on the Debitum platform are not affected as all Aforti loans were bought back on July 25th

Update Aug 9th: from Mintos*

Update Aug 9th: by Viventor

As previously announced the meeting with Aforti took place in Warsaw. The parties found a solution with regard to the technical issues. We consider the solution satisfactory for both sides and expect all issues to be resolved during next week.

Update Aug. 12th: Mintos now says they had an agreement with Aforti since January 2019, due to which Aforti would not place any new loans on the primary market. Strangely they only communicate that agreement now. Why not in January?

Our team is once again meeting with Aforti Finance in Warsaw, Poland today to continue to work out the details of last week’s initiated solution for Aforti Finance to resume transferring borrower repayments to us for distribution among investors.

We aim to release the next more detailed update tomorrow.

Until then we thank you for your patience, as well as the questions to our Investors Service team and comments on the blog and social media. We are preparing to release answers to them as soon as we handle the current priority of resuming payments.

We also wish to remind that Aforti Finance has not been placing loans on the Mintos primary market since January 2019. It was a mutual agreement with Aforti Finance following a weaker than expected loan performance and IT system related issues. Aforti Finance has continued servicing the loans since then and the total Aforti outstanding loan portfolio on the Mintos marketplace has decreased from EUR 5.7 million on December 31, 2018 to current EUR 2.2 million as of August 12, 2019. In light of adverse changes in the mood on the Polish securitization and bond market as well as our due diligence insights on the company’s internal arrangements changes, we reflected our risk precautions by downgrading Aforti to C+ in March 2019.

At this stage we remain committed to working with Aforti Finance to continue servicing loans and passing borrower repayments to investors on the Mintos marketplace as soon as possible.

Update Aug. 12th: I have analysed the Mintos loan data and came to the result that the last Aforti loan, was listed on January 2nd on the Mintos primary market.

Update Aug. 13th: Several investors report that they received a repayment incl. late fees on this Aforti loan on Viventor today.

Update Aug. 14th: Mintos has announced that Aforti payments have resumed as of today. Aforti loans on the secondary market stay suspended.

Update Nov. 6th: Viventor has issued the following update:

… an update on the situation with the investments into loans issued by Aforti Factor S.A. and Aforti Finance S.A. on ViVentor platform, we want to update you on our actions regarding the repayment of loans, including the buyback guarantees, which were put on hold from the 6th of August 2019.
On August 12th, 2019 ViVentor has negotiated and signed Settlement Agreements with Aforti Factor S.A and Aforti Finance S.A. Each agreement contained a daily payment schedule which was designed to ease up the cash flows of the companies and make it easier for them to repay their outstanding debt at that time. Both agreements expired on September 13th, 2019. By then Aforti Factor S.A has managed to pay all of their outstanding debt and the debt of Aforti Finance S.A. has settled their debt from the schedule on November 5th, 2019.
However, new debt has been growing for both companies ever since and now we are taking all necessary actions, including legal ones to have the full amount paid of current and late dues and to protect the interests of our investors.
…
What is next?
Our team is planning once again to meet with the management of Aforti Finance S.A. and Aforti Factor S.A. to continue to work out the details and find solutions to resume transferring borrower repayments to us for distribution among investors. The meeting date and place are being settled right now. We aim to release the next, more detailed update on our cooperation and ongoing payments executions within a few days (after the meeting has taken place). We would like to assure you that your concerns are of the utmost importance to us.

Earlier this week on Monday, it became evident that the Lithuanian central bank had suspended the operations of Satchelpay (source), which Grupeer* used as one of two ways for deposits by investors. From Tuesday onwards Grupeer asked investors to use the alternate deposit method via Baltic international bank only and said that they will add new payment providers this week.

Asked by P2P-Banking what the status of investor payments is, that were made shortly before or on the day of suspension to Satchelpay, a Grupeer contact told P2P-Banking:

At the moment we are in contact with the bank and have received the information that all transferred funds will be returned to the account of the sender. However, we cannot provide you with the exact terms.
More detailed information will follow.

Hopefully both incidents will be resolved satisfactorily for investors. On both issues I see room for improvement on communications with investors.

Interview with Andris Rozenbahs, COO of Viventor

wiseclerk

What is Viventor about?

Viventor is about providing sensible investment opportunities for investors from all over Europe. As we started considering the idea of Viventor less than a year ago, peer-to-peer financing was achieving remarkable success in the US and the UK. In contrary, the “old continent” was relatively underserved.

And so the goal was set – to build a peer-to-peer lending platform for European investors that is accessible, makes investing convenient, and offers high quality services, investment opportunities, and the product itself.

What are the three main advantages for investors?

Firstly, it is the investments themselves. All loans currently offered are secured by liquid real estate mortgages, as well as come with Buyback Guarantee. The weighted-average LTV ratio of our loan book is 28.45%, and we are proud to be the market leaders in terms of providing such low-risk opportunities.

Secondly, the investors receive fixed monthly interest payments. Relatively few platforms do this, but we see it as an advantage for the investors. Instead of diminishing interest and trying to crack advanced formulas, we offer straightforward logics and exactly the same payments every month. We want to make investing convenient also for people relatively unfamiliar with the world of finance and peer-to-peer lending.

Thirdly, it is the simplicity and convenience of investing. We are constantly making efforts towards removing the friction from the investment process itself by building the platform and its UI simple and intuitive for any user. Improvements based on everyday findings are constantly implemented, new languages are added, and educational material is made available. Our aim is to for investing to be simple and enjoyable.

What are the three main advantages for borrowers?

Viventor does not originate loans itself, and this is unlikely to change in the foreseeable future.

However, if we speak about the partner companies that have currently listed their loans on Viventor, there are a couple of things worth noting. The companies consist of professionals, possessing years of experience in non-bank lending and underwriting, and having their skin completely in the game. Also, access to financing for eligible borrowers is considerably faster than that offered by alternative creditors. This has been achieved by combining years of experience and knowledge with machine learning and other modern technologies.

Andris RozenbahsWhat ROI can investors expect?

Currently, investors can earn up to 7% p.a. fixed, and there are no fees withheld. The number will be going up though, as we will be adding other types of loans with higher levels of interest.

Prestamos Prima, the mother company of Viventor, operates in Spain? What led to the decision to incorporate Viventor SIA in Latvia?

We as professionals have been in the non-bank lending for many years, involved in other projects before Prestamos Prima. While Spain is one of the major markets at the moment, it is certainly not the only one, and you can expect loans from other European countries being added.

What concerns Viventor being incorporated in Latvia – we are Latvians, and prefer to stick to our origins whenever we are able to choose. There is a lot of untapped potential and hidden talent in the Baltics, but then again – I believe people familiar with the European peer-to-peer financing market are well aware of that already.

Is the technical platform self-developed?

Yes, Viventor has been built in-house from the very first line of code, and we will keep the development of platform to ourselves. All in all, we believe the right approach for improving Viventor is by gathering feedback, applying our lessons learnt, constantly pivoting and optimising. And it is clearly much more efficient to achieve this with a dedicated engineering team in-house. Continue reading →

Prestamos Prima Set to Launch P2P Lending Service Viventor in Spain

wiseclerk

Viventor logoBarcelona based company Prestamos Prima launched Viventor, a p2p lending marketplace for real estate loans.

Viventor will be focused on serving the investor side of money market. “The financing model of high street banks is outdated, and they are too slow to change the course as fast as the market demands. Recent years have shown that alternative finance solutions are reshaping the industry, and a major change on stage is inevitable,” states Andris Rozenbahs, CEO of the Prestamos Prima Group.

Vivntor will serve loans for residential and commercial property. All borrowers will be businesses, with loan terms one year and longer. The average interest rate investors will earn is expected to be around 6 to 7.5%. Prestamos Prima told P2P-Banking.com that there will be a secondary market.

The new platform, Viventor, will launch in fall 2015. Initially, it will be open for EU investors only, and provide the opportunity to invest in loans secured by Spanish mortgages. Real estate crowdfunding opportunities, investment insurance and inclusion of the borrower side are all on the roadmap. The Group CEO stresses: “We are set to make tremendous efforts to ensure security and credibility. Our goal is to provide quality investment opportunities, no junks. All the loans will be secured by mortgages carefully evaluated, and Viventor will keep its stake in all the loans listed.” Continue reading →