|
|
Post by freefalljunkie on Aug 4, 2020 7:21:43 GMT
If Metro Bank had been required to provide full FSCS cover to all of the existing loan book as a condition of doing the deal to acquire Ratesetter they wouldn't have gone ahead and bought it - it is as stark as that. Look at the price Metro managed to negotiate- £2.5m (rising to £12m if certain targets are set - but that after 3 years)- it is , for Metro, a marginal deal. If it was more expensive for them (and full cover of the loan book would have made it far more expensive) they would have walked away- and then what would have happened? It is pretty clear what would have happened- the business would be in wind-up mode. I think this is absolutely right. £2.5m is a staggeringly low figure, pocket money for any bank. We will never know just how dire Ratesetter's own financial position had become, but what this suggests to me is that they were heading full steam ahead for insolvency and had no option but to take an ultra low ball offer or face going under within months.
|
|
macq
Member of DD Central
Posts: 1,934 
Likes: 1,199
|
Post by macq on Aug 4, 2020 7:56:16 GMT
While its early days on the details and a lot of guessing and having a bigger name onboard feels like a good move -
It seems everyone would agree that the price paid by Metro is a steal and that for what ever reason Covid,the business as a whole,slow take up of p2p in general etc that RS was in a dire place.
So while its only my take on whats been said it seems Metro have bought the knowledge and ready made lending platform company so they think the infrastructure is ok but the model that its being used for is not.But they can't afford to close RS and rightly from their point of view they have said they are not liable or ready to cover the old loan book which makes sense.
But because they can not buy the old loan book or want to cover it they are basically saying what? RS should continue in the same way as before as a little sideline project/standalone company/keep the name its nothing to do with us?
I have seen mention of keeping the brand but also sure i read they want to put some of the new loans through RS which if like normal banking business would be without the PF i assume - so RS now would be running the old loans down,running a PF and also moving on with the new business model whatever it maybe and presumably keeping the new money ring fenced(but with all that going on hopefully redundancies may not occur for the staff)
|
|
beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
Posts: 670
Likes: 322
|
Post by beagle on Aug 4, 2020 8:45:05 GMT
All that matters is:
1. Ratesetter can now keep operating and therefore keep releasing, ensuring more investors get money (no one has lost anything so far)
2. Metrobank can lend, which is good for them and so for ratesetter too also therefore for the many people too
3. Staff keep their jobs, they are still people and doing a job, we might not always like it but they are doing their best in the current climate.
4. We realise administration would be so much worse (fees) and so this is the best of the situations.
The price doesnt matter, lots of companies have lost value, staff and in fact everything. However, ratesetter still had assets of value and a strong delivery of 0 capital losses. If it can be leveraged then great, who cares about the fine details, the staff are in work, the company operates and capital is injected. A result given COVID.
|
|
|
|
Post by Ace on Aug 4, 2020 8:57:46 GMT
All that matters is: 1. Ratesetter can now keep operating and therefore keep releasing, ensuring more investors get money (no one has lost anything so far) 2. Metrobank can lend, which is good for them and so for ratesetter too also therefore for the many people too 3. Staff keep their jobs, they are still people and doing a job, we might not always like it but they are doing their best in the current climate. 4. We realise administration would be so much worse (fees) and so this is the best of the situations. The price doesnt matter, lots of companies have lost value, staff and in fact everything. However, ratesetter still had assets of value and a strong delivery of 0 capital losses. If it can be leveraged then great, who cares about the fine details, the staff are in work, the company operates and capital is injected. A result given COVID. I totally agree with your 4 points. The sale to Metro was the only way of keeping the lights on at RS. While the sale price doesn't matter to us lenders it is a clear indication that RS are fully expecting to have to enforce capital losses in the near future. Otherwise they would never have sold so cheaply. Metro will also be aware of this, but expect to be able to make a profit by reducing the operating costs. I expect capital haircuts to be announced shortly after the deal goes through.
|
|
|
|
Post by bouncycastle on Aug 4, 2020 9:14:31 GMT
Did the Titanic sink because of the iceberg? Or because of the hubris of its designers/builders/owners? Discuss. FWIW I think that Covid19 is RS's iceberg. Sure, it's the immediate cause, but by no means the primary one. I don't think it's even the immediate cause, else how come the other 'Big 2' continue to thrive? (I use that word tenuously in the case of FC) one of which is now a plc and the other has a banking licence!
Not forgetting of course that the smaller p2p players started going to the wall long before COVID19 existed.
Poor management decisions, BIG strategic mistakes yes but RS didn't die from any virus.
(I was going to include disenfranchising it's loyal customers too but the aforementioned others seem to have miraculously got away with that one!)
You say thrive as if they are. Zopa has never made a cent. It’s unlikely to from P2P also. The bank is there to fuel the loans with cheap deposits which is exactly what Metro have just done. FC have survived by relying on a massive cash pile and the stroke of luck that the govt decided to use them as a SME loan deliverer for covid. There’s no way any business of a size like RS could survive a £250m call on liquidity. It’s unprecedented. Anyone who doesn’t acknowledge that or just says ‘nonsense’ is displaying their ignorance. I’ll leave that there.
|
|
ceejay
Posts: 975
Likes: 1,149
|
Post by ceejay on Aug 4, 2020 9:15:09 GMT
All that matters is: 1. Ratesetter can now keep operating and therefore keep releasing, ensuring more investors get money (no one has lost anything so far) 2. Metrobank can lend, which is good for them and so for ratesetter too also therefore for the many people too 3. Staff keep their jobs, they are still people and doing a job, we might not always like it but they are doing their best in the current climate. 4. We realise administration would be so much worse (fees) and so this is the best of the situations. The price doesnt matter, lots of companies have lost value, staff and in fact everything. However, ratesetter still had assets of value and a strong delivery of 0 capital losses. If it can be leveraged then great, who cares about the fine details, the staff are in work, the company operates and capital is injected. A result given COVID. I totally agree with your 4 points. The sale to Metro was the only way of keeping the lights on at RS. While the sale price doesn't matter to us lenders it is a clear indication that RS are fully expecting to have to enforce capital losses in the near future. Otherwise they would never have sold so cheaply. Metro will also be aware of this, but expect to be able to make a profit by reducing the operating costs. I expect capital haircuts to be announced shortly after the deal goes through.If that's correct, then there is an interesting dilemma for us lenders - do we want the deal to be approved and complete quickly, to give us the security we crave, or do we want it to drag out a bit so we can extract more of our funds by RYI or regular repayment? Although I do wonder whether, if you were Metro, whether you would prefer to have an attention-grabbing haircut to be done on your watch or to have had it done by the old management prior to it being your responsibility? Of course, it might be forced. If approval takes months and the PF approaches tipping point, then there won't be any alternative.
|
|
beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
Posts: 670
Likes: 322
|
Post by beagle on Aug 4, 2020 9:27:08 GMT
I don't think it's even the immediate cause, else how come the other 'Big 2' continue to thrive? (I use that word tenuously in the case of FC) one of which is now a plc and the other has a banking licence!
Not forgetting of course that the smaller p2p players started going to the wall long before COVID19 existed.
Poor management decisions, BIG strategic mistakes yes but RS didn't die from any virus.
(I was going to include disenfranchising it's loyal customers too but the aforementioned others seem to have miraculously got away with that one!)
You say thrive as if they are. Zopa has never made a cent. It’s unlikely to from P2P also. The bank is there to fuel the loans with cheap deposits which is exactly what Metro have just done. FC have survived by relying on a massive cash pile and the stroke of luck that the govt decided to use them as a SME loan deliverer for covid. There’s no way any business of a size like RS could survive a £250m call on liquidity. It’s unprecedented. Anyone who doesn’t acknowledge that or just says ‘nonsense’ is displaying their ignorance. I’ll leave that there. Thrive??? in what way Zopa not making money FC pulling out of two markets and rescued by CIBILS
|
|
|
|
Post by Ace on Aug 4, 2020 9:28:55 GMT
I totally agree with your 4 points. The sale to Metro was the only way of keeping the lights on at RS. While the sale price doesn't matter to us lenders it is a clear indication that RS are fully expecting to have to enforce capital losses in the near future. Otherwise they would never have sold so cheaply. Metro will also be aware of this, but expect to be able to make a profit by reducing the operating costs. I expect capital haircuts to be announced shortly after the deal goes through.If that's correct, then there is an interesting dilemma for us lenders - do we want the deal to be approved and complete quickly, to give us the security we crave, or do we want it to drag out a bit so we can extract more of our funds by RYI or regular repayment? Although I do wonder whether, if you were Metro, whether you would prefer to have an attention-grabbing haircut to be done on your watch or to have had it done by the old management prior to it being your responsibility? Of course, it might be forced. If approval takes months and the PF approaches tipping point, then there won't be any alternative. I don't think Metro will be bothered. The capital haircut will be done in the name of RS. They won't care about disenfranchising their lender base as they no longer want them. RS borrowers won't care that lenders are taking a hit either, so no real harm to Metro.
|
|
beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
Posts: 670
Likes: 322
|
Post by beagle on Aug 4, 2020 9:29:04 GMT
All that matters is: 1. Ratesetter can now keep operating and therefore keep releasing, ensuring more investors get money (no one has lost anything so far) 2. Metrobank can lend, which is good for them and so for ratesetter too also therefore for the many people too 3. Staff keep their jobs, they are still people and doing a job, we might not always like it but they are doing their best in the current climate. 4. We realise administration would be so much worse (fees) and so this is the best of the situations. The price doesnt matter, lots of companies have lost value, staff and in fact everything. However, ratesetter still had assets of value and a strong delivery of 0 capital losses. If it can be leveraged then great, who cares about the fine details, the staff are in work, the company operates and capital is injected. A result given COVID. I totally agree with your 4 points. The sale to Metro was the only way of keeping the lights on at RS. While the sale price doesn't matter to us lenders it is a clear indication that RS are fully expecting to have to enforce capital losses in the near future. Otherwise they would never have sold so cheaply. Metro will also be aware of this, but expect to be able to make a profit by reducing the operating costs. I expect capital haircuts to be announced shortly after the deal goes through. capital haircuts or cut unterest again. they could do that now... and they dont.
|
|
|
|
Post by Ace on Aug 4, 2020 9:32:27 GMT
I totally agree with your 4 points. The sale to Metro was the only way of keeping the lights on at RS. While the sale price doesn't matter to us lenders it is a clear indication that RS are fully expecting to have to enforce capital losses in the near future. Otherwise they would never have sold so cheaply. Metro will also be aware of this, but expect to be able to make a profit by reducing the operating costs. I expect capital haircuts to be announced shortly after the deal goes through. capital haircuts or cut unterest again. they could do that now... and they dont. Interest cuts to zero will likely come first, but they won't want to create too much noise prior to approval if they can avoid it.
|
|
beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
Posts: 670
Likes: 322
|
Post by beagle on Aug 4, 2020 9:35:51 GMT
indeed. when i called them. i spoke to their head of dept. he was super clear and frank. advised that current ratios are holding and the PF is sustaining at the moment
of course you are right it can change. but if it was so dire they could cut to 0 now
|
|
|
|
Post by Ace on Aug 4, 2020 9:40:49 GMT
indeed. when i called them. i spoke to their head of dept. he was super clear and frank. advised that current ratios are holding and the PF is sustaining at the moment of course you are right it can change. but if it was so dire they could cut to 0 now Yes the ratios are almost holding, but the covid impact has hardly started yet. It's just not going to be sustainable IMHO
|
|
|
|
Post by bouncycastle on Aug 4, 2020 9:57:35 GMT
You say thrive as if they are. Zopa has never made a cent. It’s unlikely to from P2P also. The bank is there to fuel the loans with cheap deposits which is exactly what Metro have just done. FC have survived by relying on a massive cash pile and the stroke of luck that the govt decided to use them as a SME loan deliverer for covid. There’s no way any business of a size like RS could survive a £250m call on liquidity. It’s unprecedented. Anyone who doesn’t acknowledge that or just says ‘nonsense’ is displaying their ignorance. I’ll leave that there. Thrive??? in what way Zopa not making money FC pulling out of two markets and rescued by CIBILS Exactly. We agree.
|
|
macq
Member of DD Central
Posts: 1,934
Likes: 1,199
|
Post by macq on Aug 4, 2020 10:01:17 GMT
At first i thought it was good news and to be fair it probably is but my understanding is that Metro have no interest in the previous business and have no intention of helping it apart from taking/using the best bit the infrastructure and using it in a different way.It seems hard to see a p2p/retail product moving forward but it does help keep the RS platform to administer the current loan book so there is some upside but it may be limited but hoping not - But will be interesting if nothing else!
|
|
beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
Posts: 670
Likes: 322
|
Post by beagle on Aug 4, 2020 11:05:16 GMT
indeed. when i called them. i spoke to their head of dept. he was super clear and frank. advised that current ratios are holding and the PF is sustaining at the moment of course you are right it can change. but if it was so dire they could cut to 0 now Yes the ratios are almost holding, but the covid impact has hardly started yet. It's just not going to be sustainable IMHO That sir is true. It will be interesting. If the PF drops again or if they can sustain the covid holiday payments etc and collect debts. I suspect a further cut in interest by Christmas.
|
|
