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Post by wiseclerk on Sept 19, 2016 13:31:33 GMT
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jlend
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Post by jlend on Sept 19, 2016 17:37:10 GMT
Good to see Ratesetter investing for the future rather than chasing a short term profit
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jlend
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Post by jlend on Sept 19, 2016 20:02:07 GMT
From the results: ftalphaville.ft.com/2016/09/19/2175309/p2p-lending-rediscovers-balance-sheet-magic/(you may need to sign in to see it, but I think it's worth it not just now but more often) That snippet is from the latest annual accounts of Ratesetter, one of the UK’s top three “peer-to-peer” lenders, and shows the startup taking £2m of risk on to its own balance sheet in order to fund a borrower in “financial difficulty”.I wonder how this works. All lenders were paid back early and RS took on the risk? Maybe this gave them more room to restructure the debt, which in the framework of a normal loan to lenders would have failed. Interesting. I wonder how large the original loan funded by lenders was
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Post by westonkevRS on Sept 19, 2016 20:18:11 GMT
Good to see Ratesetter investing for the future rather than chasing a short term profit A bit more insight here: www.cityam.com/249646/neil-woodford-backed-p2p-lender-ratesetter-reports-lossMy favourite stat though is " The number of active investors, meanwhile, grew from 18,608 to 31,036". These are real people, not institutions. This takes time and effort, but probably the growth number I'm second most proud of. Kevin.
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warn
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Post by warn on Sept 20, 2016 7:19:25 GMT
...probably the growth number I'm second most proud of. Nudge nudge...
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Post by propman on Sept 20, 2016 15:39:43 GMT
From the results: ftalphaville.ft.com/2016/09/19/2175309/p2p-lending-rediscovers-balance-sheet-magic/(you may need to sign in to see it, but I think it's worth it not just now but more often) That snippet is from the latest annual accounts of Ratesetter, one of the UK’s top three “peer-to-peer” lenders, and shows the startup taking £2m of risk on to its own balance sheet in order to fund a borrower in “financial difficulty”.I wonder how this works. All lenders were paid back early and RS took on the risk? Maybe this gave them more room to restructure the debt, which in the framework of a normal loan to lenders would have failed. Reading between the lines, it sounds like the loan in question might have been sufficiently large to have made a noticeable dent in the PF had it defaulted. That might have spooked lenders so RS lent money itself hoping the business could overcome its financial difficulty. (Just speculation.) Sounds worryingly close to "pretend and extend" to me!
Given that this was as at 31 March, mit would be good to get an update on what has happenned to it since and whether this has remained the only instance.
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amphoria
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Post by amphoria on Sept 20, 2016 16:44:01 GMT
propman wrote: Given that this was as at 31 March, mit would be good to get an update on what has happenned to it since and whether this has remained the only instance. The statement was in the Future Developments section so happened since 31st March.
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Post by cautious on Sept 21, 2016 9:58:42 GMT
Interesting that P2P banking has the March 2015 loans under management at 341M and City AM at 431M GBP....ahem.
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Post by mrclondon on Sept 21, 2016 16:55:30 GMT
Good to see Ratesetter investing for the future rather than chasing a short term profit A bit more insight here: www.cityam.com/249646/neil-woodford-backed-p2p-lender-ratesetter-reports-lossMy favourite stat though is " The number of active investors, meanwhile, grew from 18,608 to 31,036". These are real people, not institutions. This takes time and effort, but probably the growth number I'm second most proud of. Kevin. A c. 67% growth in the number of active lenders is indeed something to be proud of. That said, 31036 is a miniscule proportion of the c. 50 million adults in the UK and is roughly the capacity of a single typical Premier League stadium. So despite the (almost) first mover advantage that sees most media reports on p2p mention zopa, ratesetter and funding circle penetration remains at around 0.06% of the adult population.
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adrianc
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Post by adrianc on Sept 21, 2016 17:07:24 GMT
A c. 67% growth in the number of active lenders is indeed something to be proud of. That said, 31036 is a miniscule proportion of the c. 50 million adults in the UK and is roughly the capacity of a single typical Premier League stadium. So despite the (almost) first mover advantage that sees most media reports on p2p mention zopa, ratesetter and funding circle penetration remains at around 0.06% of the adult population. While I agree with your point, I'm not sure the total number of adults in the country is the best statistic to use - or even the total number of households (about 26.5m). Depending on which metrics you look at, a third of the adult population isn't saving any of their income, and a fifth have absolutely no savings at all. The average household has a tad under 6% of their household income in savings - if we go with the average household income of just over £23,500, then that's about £1,400... That doesn't sound like somebody who should be using relatively risky investment products to me. Not a huge benefit, either - If they get a 5% return on £1,400, then that's just £70/year.
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Post by ratehopper on Sept 25, 2016 10:49:37 GMT
Direct quote from the press release:
"One of the main investment considerations for the money raised in 2015 from a consortium of investors including Woodford and Artemis was to alter the timing of receiving income: in 2015 RateSetter started to charge a greater proportion of its fees over the lifetime of loans rather than purely up front when loans are written. This creates a more sustainable recurring income stream as more money comes in over the term of loans, reducing pressure to lend in order to generate revenue when credit conditions are poor. Importantly, it also aligns RateSetter’s interests with those of its investors as it provides a financial incentive to only approve loans which perform. If all fees had been taken upfront when loans were written, rather than charged over the lifetime of loans, RateSetter would have recorded a pre-tax profit in 2015-16."
I assume the reference to "investors" is to the institutional investors in Ratesetter, i.e. the likes of Woodford and Artemis. Seems like they have imposed this change on Ratesetter as a condition of their investment. Maybe this is sensible, but I wonder whether these same investors are now putting pressure on Ratesetter to minimise the rates paid to lenders (which a lot of members of this forum are complaining about) in order to improve Ratesetter's profit margin? This might compensate for the change made in spreading fee income over the life of loans and improved margins will also increase the value of the shares in Ratesetter over time - much to the benefit of institutional investors. That means that we lenders are not seen as an asset by these institutional investors but a target to improve profit margin. Hey ho, the dynamics always change when a company takes on institutional money. Ratesetter now has three stakeholder groups: institutional shareholders, borrowers and lenders. I am betting that we lenders are now seen as expendable.
No doubt the institutional investor representatives on the Ratesetter Board are bending their ear about this. The only way we investors will be heard is if we start withdrawing our money. Maybe time to start spreading my loans away from Ratesetter. I suspect this is only going one way......
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Post by davee39 on Sept 25, 2016 12:31:59 GMT
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Post by westonkevRS on Sept 25, 2016 14:48:53 GMT
Direct quote from the press release: "This creates a more sustainable recurring income stream as more money comes in over the term of loans, reducing pressure to lend in order to generate revenue when credit conditions are poor. Importantly, it also aligns RateSetter’s interests with those of its investors as it provides a financial incentive to only approve loans which perform. If all fees had been taken upfront when loans were written, rather than charged over the lifetime of loans, RateSetter would have recorded a pre-tax profit in 2015-16." I assume the reference to "investors" is to the institutional investors in Ratesetter, i.e. the likes of Woodford and Artemis.... Apologies, but pretty much all of the assumptions in the quotes are incorrect. By "investors", we mean lenders. Personally I prefer the term lender, but inside RateSetter people use the description investors. So the aim of the recurring fees is to make RateSetter more sustatinable based on the portfolio, and less reliant on writing loans week in, week out. And if those lose default or pay back early, we don't get our income the same as you don't get your interest. So the alignment means RateSetter and consumer lenders. It is well documented that most platforms (certainly Z and FC) and majority institutional. Whereas RateSetter has always remained 95% consumer lenders with some small SMEs, schools and charities. 5% was institutional, but this is being pared back. And more recently we have set a commitment that retail lenders remains are focus, we are not interested in seeking out institutional lending that wants to cherry pick. We have an egalitarian philosophy that we are sticking to. Recent events in the US we feel have validated this strategy or principle. So to finish, no there have not been any demands by our equity investors, who are very mich oversight but with hands off. They dictate nothing. So yes it is only going one-way, more retail lenders! We aim to be a household name, and continue to provide a better deal for lenders ("investors") and borrowers. Kevin.
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Post by westonkevRS on Sept 25, 2016 15:14:52 GMT
On reflection, the reference to "investors" is easy to misinterpret as being equity investors. As typically that is what it means (hence why I prefer lenders). So apologies to ratehopper , it's just that when we've made such a commitment to retail lenders it always grates a little when it is hinted we have sold-out in some way to the big institutions. When the reality and the effort not to (sell-out) has been huge. It might have been so much easier if we had. Kevin.
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Post by ratehopper on Sept 26, 2016 7:48:13 GMT
Kevin, my understanding is that Woodford and Artemis are equity investors in your business and not lenders. So, it is possible for you to have a commitment to retail lenders while at the same time taking investment from institutional equity investors - which is what you have done. I am not in a position to know the internal workings of your company. However, I think you will find it hard to deny that it is in the interests of equity investors to see your profit margins at a maximum. One way of doing this is for you to borrow as cheaply as you can and to lend at the highest rates you can. Judging by the comments on this forum, many lenders feel that they are not getting the deal they once did and see a concerted downward pressure on lending rates. You may not care about this if you are attracting new lenders who are only too happy to get anything above the derisory rates offered on conventional deposit accounts. However, "newbies" in my view quickly get over this euphoria and become hardened by experience. Old hands in the meantime are telling us on this forum that they are drifting away from RS and seeking better rates elsewhere. Newbies will catch up. Lenders are an essential stakeholder in your business. It is important that you listen to what they are saying.
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