ceejay
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Post by ceejay on Jun 15, 2020 8:30:18 GMT
No. P2P lending can't and won't ever get that level of protection, nor should it. FSCS protection is freely available at FSCS rates, derisory though they may be at the moment. As for what it would mean to existing lenders - well, there are many possibilities. Just note what Metro say about what interests them - RS's distribution network for selling unsecured loans. Not secured property loans, which are a significant part of the present portfolio. Here are a few scenarios off the top of my head: (1) the RS business carries on more or less unchanged, but rebranded. Metro continue to offer something like the current Access product, selling it as a higher risk/return option to their many (mostly young) savers. The 1Y and 5Y markets are run down. (2) Metro only want the borrowers, not the lenders. Current loans are simply run down, no new retail lending, therefore no RYIs, you just wait till the end of the loan and get your money back. The positive thing about this scenario is that Metro can probably find enough cash to make sure the PF doesn't run out. (3) Metro want rid of retail lenders asap and after a short run down period (a few months) just buy the loan book off us and we all have to take our money elsewhere. I'm sure there are more... One big downside for me is that it would take RS out of the game as far as consolidation within the P2P market goes - there could have been some interesting possible marriages. 3) would be great if we all get our money back without another haircut but I can't see how Metrobank with a market cap of on 180M could be in a position to buy a loan book of 800M? The fact that these talks are taking place at all to me indicates that Ratesetter's management realise the business has no future in its current form. Agree that (3) isn't very likely, unless Metro sourced a lot of external investment. If I had to guess, I'd say a mix of all three: Metro continue only with something like the Access product, 1Y and 5Y are run down, and after a couple of years what remains in the 5Y market (the 1Y having all gone organically) might get bought out or transferred elsewhere.
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agent69
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Post by agent69 on Jun 15, 2020 9:05:01 GMT
3) would be great if we all get our money back without another haircut but I can't see how Metrobank with a market cap of on 180M could be in a position to buy a loan book of 800M? The fact that these talks are taking place at all to me indicates that Ratesetter's management realise the business has no future in its current form. The first of many?
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Post by shanghaiscouse on Jun 15, 2020 10:24:52 GMT
I imagine this is instigated by Ratesetter as they have been trying to raise capital for a while now, they have hitherto depended on getting £12-15m of capital injections through the door annually to meet debt committments. Probably there are similar talks with other potential buyers, but Metro may be the one mad enough to consider it. Metro itself is an absolute dog and sinking, tying a brick to a brick is never a good idea. Its a sign of desperation on both sides that this would even be considered.
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sd2
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Post by sd2 on Jun 15, 2020 10:33:54 GMT
Struggling to make sense of this. Metro bank not the best of banks, as in the underestimation of risk. Looks like whole board "fell on their swords" If I recall correctly? ratesetter backers were Woodford via patient capital and Artemis. Not sure which Artemis fund was doing the investing. Either way patient capital are not going to be doing any new investing, a given I think. Can't say about Artemis. Maybe they are the ones forcing the sale or at least trying to. I am assuming they both still have investment in ratesetter. Should metro bank takeover, I would assume they would have to run the loan book down in case of platform failure? And I very much doubt they will restore previous interest rates (but you never know) I am not sure what future form lending interest rates will take and if they will want lenders like us. I suspect institutional investors preffered. If so then a possibility of offers for our loans. A/ all capital returned. B/ leave early with reduced capital. The terms and conditions would obviously apply. But giving an option of leaving without all capital this would be attractive to some lenders. As an aside how much is ratesetter worth? Will the investors (not us) be happy with it? What will FCA take on this be. And for that matter the Prudential regulatory authority views. citywire.co.uk/funds-insider/news/woodford-and-artemis-ramp-up-ratesetter-stakes/a1021013 |
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Post by bouncycastle on Jun 15, 2020 10:52:09 GMT
Metro (the buyers of the platform) both end up as winners- and with luck someone like Rhydian (who I have a lot of time for)can have a stellar career pithing Metro Bank (they are not exactly blessed with an abundance of home-grown entrepreneurial management talent). Early stages of discussion, but the fact that Metro had to put out a confirmatory RNS this morning shows there is real substance to this. Not sure how well you know Rhydian, but he hasn’t got much time for listening to others, so not convinced I can see him working at Metro tbh...
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Post by bouncycastle on Jun 15, 2020 10:58:41 GMT
Struggling to make sense of this. Metro bank not the best of banks, as in the underestimation of risk. Looks like whole board "fell on their swords" If I recall correctly? ratesetter backers were Woodford via patient capital and Artemis. Not sure which Artemis fund was doing the investing. Either way patient capital are not going to be doing any new investing, a given I think. Can't say about Artemis. Maybe they are the ones forcing the sale or at least trying to. I am assuming they both still have investment in ratesetter. Should metro bank takeover, I would assume they would have to run the loan book down in case of platform failure? And I very much doubt they will restore previous interest rates (but you never know) I am not sure what future form lending interest rates will take and if they will want lenders like us. I suspect institutional investors preffered. If so then a possibility of offers for our loans. A/ all capital returned. B/ leave early with reduced capital. The terms and conditions would obviously apply. But giving an option of leaving without all capital this would be attractive to some lenders. As an aside how much is ratesetter worth? Will the investors (not us) be happy with it? What will FCA take on this be. And for that matter the Prudential regulatory authority views. citywire.co.uk/funds-insider/news/woodford-and-artemis-ramp-up-ratesetter-stakes/a1021013Woodford and Artemis don’t have huge holdings. All in the public domain how large/small, but it isn’t a great deal. It’s a good point about the FCA. I’m not sure they would allow any sort of equity stakeholder return before ensuring retail lenders/investors get their funds back, or at least have enough in the PF to support the book. The other issue for the FCA is that because of the failureA in the sector recently they must ensure that this is smooth. They have a lot of ‘regulatory capital’ at stake themselves as another howler with a big one like RS would ask a ton of questions. Get the popcorn ready
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zccax77
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Post by zccax77 on Jun 15, 2020 11:07:00 GMT
Metro bank has a asset problem as in they cannot dole out money at high enough rates to cover their costs whilst its branch network accumulates massive amounts of cash, whilst Ratesetter has a liability problem whereby they cannot get access to cheap funding but can dole out money at attractive rates. Due to Covid-19 investors have fled the platform or there is no way RS can get back to BAU in the short to medium term. What a great match. Re the "regulatory capital", Metro will just run the book off in an orderly manner. Any new lending would be using their own cheap funds. RS do not have a choice, they only have equity of £4m and are making £4m of losses a year, therefore if they are not acquired they will do a Lendy. The FCA will waive this through.
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Post by bouncycastle on Jun 15, 2020 11:50:15 GMT
I only see the FCA waiving this through if they have guarantees that 40,000 lenders that invested in their regulated 36H system get paid out with no capital loss.
Shareholders can swing for their lunch as far as the FCA are concerned and quite rightly
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coogaruk
Hello everyone! Anyone remember me?
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Post by coogaruk on Jun 15, 2020 11:51:00 GMT
I predicted such an outcome for Peer to Peer Lending during a visit to Funding Circle's HQ in 2012. Have always thought it inevitable really.
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Post by bouncycastle on Jun 15, 2020 11:53:12 GMT
What outcome?
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tjtl
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Post by tjtl on Jun 15, 2020 12:02:59 GMT
No. P2P lending can't and won't ever get that level of protection, nor should it. FSCS protection is freely available at FSCS rates, derisory though they may be at the moment. As for what it would mean to existing lenders - well, there are many possibilities. Just note what Metro say about what interests them - RS's distribution network for selling unsecured loans. Not secured property loans, which are a significant part of the present portfolio. Here are a few scenarios off the top of my head: (1) the RS business carries on more or less unchanged, but rebranded. Metro continue to offer something like the current Access product, selling it as a higher risk/return option to their many (mostly young) savers. The 1Y and 5Y markets are run down. (2) Metro only want the borrowers, not the lenders. Current loans are simply run down, no new retail lending, therefore no RYIs, you just wait till the end of the loan and get your money back. The positive thing about this scenario is that Metro can probably find enough cash to make sure the PF doesn't run out. (3) Metro want rid of retail lenders asap and after a short run down period (a few months) just buy the loan book off us and we all have to take our money elsewhere. I'm sure there are more... One big downside for me is that it would take RS out of the game as far as consolidation within the P2P market goes - there could have been some interesting possible marriages. 3) would be great if we all get our money back without another haircut but I can't see how Metrobank with a market cap of on 180M could be in a position to buy a loan book of 800M? The fact that these talks are taking place at all to me indicates that Ratesetter's management realise the business has no future in its current form. Re Metro's ability to buy an 800 m loan book given their market capitalisation. Last I looked Metro already had gross assets (loan book) of over £20 bn- so another £800m may require some additional Tier 1 funding, but very limited. Metro would't have gone this far unless they can be confident as to funding. What would be the bigger concern I suspect, the same we have, is the exposure to future credit losses- if a deal gets done (and I suspect it is a big IF) I would be surprised if Metro paid much if anything for the equity, or at least make any purchase price be subject to agreed credit loss levels
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macq
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Post by macq on Jun 15, 2020 12:26:48 GMT
if this was to happen i could see a Landbay situation where by at some point Metro pay back the loan book and close to retail investors and continue RS in some other form as no bank is going to want the hassle and threat of bad publicity of a true p2p platform (and then remembers Goldman Sachs dipping their toe in and also talking of p2p  ) |
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Post by honda2ner on Jun 15, 2020 15:04:55 GMT
Metro got into trouble for massively underestimating risk. They aren't profitable and probably don't have a future.
Now Metro is looking at buying a high risk unprofitable company.
Seems they haven't learnt their lesson.
Utter madness. God help us all if this goes through.
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adrian77
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Post by adrian77 on Jun 15, 2020 15:29:34 GMT
Very intertested in all of the above comments - only plus sign I can think off is that swap rates are very low at the moment and I think now there are bargains to be had by people who have very deep pockets and know what they are doing. I did not realise just how much Metro had tanked. To be honest I may take a punt on Metro Bank shares - no sure yet whether to go long or short! I guess an ideal result for us would be that RS is taken over and even if the loan book is slowly run down that would be better than them going under...hopefully the UK economy is starting to recover now and their default rate will start to come down? I think this is going to be a close one but my hunch is that we will get our money back albeit after many more months,
I still think P2P has a good future but only once somebody comes up with a sound business model.
I am not expert in this field so all constructive criticism welcomed...
I thank you
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rrrupert
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Post by rrrupert on Jun 15, 2020 16:52:59 GMT
The highly regarded Lex column of the Financial Times ran a commentary today on this potential takeover. It is behind a paywall but I have quoted below the salient part;
"Metro Bank could provide the liquidity needed to support the peer-to-peer book, some £800m in loans. For its part Metro would get a new brand and technology platform. Metro Bank could then use its cheap deposits to fund new unsecured loans from its own balance sheet."
The tone of the column was very positive on the benefits to Metro of a tie up if the price is right..they assume £62m.
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