News Briefing - Crowdfunding, SME And Alternative Finance

crowd walking

1. UK – P2P

 

Peer2Peer Finance News on more securitisation from Funding Circle.

 

“FUNDING Circle has entered the securitisation market for the third time, with a £187m portfolio of UK loans originated by the peer-to-peer business lender.

Alternative asset manager Pollen Street Capital is the equity sponsor of the deal, having backed Funding Circle’s last securitisation eleven months ago.

While Funding Circle operates in the UK, the US, Germany and the Netherlands, the loans included in the securitisation are just from the UK.

The senior tranche was awarded an Aa3, A (high) and AA- rating by ratings agencies Moody’s, DBRS and Kroll respectively, Funding Circle said on Tuesday.

On closing, the spread over one-month Libor on the senior tranche was 105 basis points.

This is higher than Funding Circle’s second securitisation which was priced at 75 basis points, but lower than the 220 basis points on its first debt-packaging transaction in 2016.

“This latest securitisation further validates the attractive, risk-adjusted returns that are being generated for investors in SME loans,” said Sachin Patel (pictured), chief capital officer at Funding Circle.”

 

 

2. UK – P2P

 

P2PFN on industry reaction to FCA risk pronouncements.

 

“THE PEER-TO-PEER lending industry has hit back at a warning from the financial regulator to consumers about the risks of the Innovative Finance ISA (IFISA).

The Financial Conduct Authority (FCA) said it has seen evidence that IFISAs are being promoted alongside cash ISAs and has urged consumers to “carefully consider where their money is being invested” before purchasing the “high risk” product.

“Investments held in IFISAs are high-risk with the money ultimately being invested in products like mini-bonds or P2P investments,” the FCA said on Monday.

“These types of investments may not be protected by the Financial Service Compensation Scheme so customers may lose the money invested or find it hard to get back.

“Anyone considering investing in an IFISA should carefully consider where their money is being invested before purchasing an IFISA.”

The regulator has previously flagged concerns over the way that P2P is marketed to consumers and has proposed categorisation or appropriateness tests, potentially limiting the sector to sophisticated investors.

P2P lending platforms have criticised the FCA’s comments, arguing it does not differentiate between the various types of peer-to-peer lending, some of which are less risky than investing in stock markets.

Frazer Fearnhead is founder and chief executive at the House Crowd, a property-focused P2P lender. He said restricting P2P products to sophisticated investors is not the answer.

“Restricting to sophisticated investors would just kill the industry – it is meant to give the general public access to the sorts of returns and investments that only high-net-worth people could previously access,” he told Peer2Peer Finance News.

“If you rob them of that, what are they left with? They’ll never stand a chance to build up a nest egg for retirement because they are left with things like cash ISAs which don’t even beat inflation.”

He said the FCA’s warning is a “knee-jerk reaction” and it is unfairly lumping high-risk products in with lower-risk ones.

“I appreciate the need for transparency but the FCA tends to go over the top. To differentiate between what we do and a stocks and shares ISA and to try and introduce this level of appropriateness test which they are trying to do is ridiculous.”

He pointed out that losses suffered by listed companies can be far greater than those from the P2P sector. Although P2P lenders which secure loans against property may experience loan defaults, they do not see such hefty falls in asset value.

“There has never been a property in the UK that has fallen by 80 per cent in six months,” he said.

“To me, lending is a lot simpler than investing in a company, you need to be an expert in it to understand all the things that could go badly or well with that company.

“Lending can be secured against an asset and the risk is that the borrower doesn’t repay, it is very simple. There are risks involved and borrowers need to be aware of them, but the FCA does not seem to distinguish between different types of P2P loans. There are different levels of security with P2P loans.”

Julia Groves, partner at Downing, said she thinks the industry is doing well when it comes to financial promotion, contrary to the FCA’s warning.”

 

http://www.p2pfinancenews.co.uk/2019/04/02/industry-hits-back-as-fca-warns-on-ifisa-risk/

  

3. UK – P2P

 

The Telegraph on difficult times at Lendy:

 

“roubled peer-to-peer platform Lendy has taken out a £1m loan against its own provision fund, a pot set aside to reimburse investors in cases where the borrower fails to repay on a loan on time.

The company, which has been beset with issues of late-paying borrowers, mortgaged its lifeboat fund with Metro Bank in September.

The £1.55m cash in Lendy’s provision fund is discretionary and not expected to cover all bad debts. However, the charge against the fund would leave customers with less protection in the event of widespread problems as it would pay out to the bank before investors.”

 

https://www.telegraph.co.uk/investing/news/lendy-takes-1m-loan-against-provision-fund/

 

 

 

4. UK – AltFi

 

Revolut comes under the BBC’s microscope again:

 

https://www.bbc.co.uk/news/technology-47751945

 

 

5. International – FinTech

 

A University of Amsterdam professor opines on the future role of banks in FinTech in International Banker.

https://internationalbanker.com/banking/bank-strategy-in-the-world-of-fintech/

 

 

6. International – FinTech

 

Comstock’s Magazine offers an encomium on blockchain technologies.

 

https://www.comstocksmag.com/longreads/blockchain-wave