chris1200
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Post by chris1200 on Aug 21, 2020 10:47:09 GMT
Out of interest, is there any particular reason why you assume 'no RYIs'?
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littleoldlady
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Post by littleoldlady on Aug 21, 2020 12:52:16 GMT
All Metro want is the infrastructure to use for their own (and maybe institutional?) money and i assume think this is easier then starting from scratch or fighting others for the best bits of RS if they had gone under so not sure they are worried about point One.And as it is all but a rescue package in name you would hope they will be clear at some point what the current investors can expect The second point about non-liability would you assume be water tight in any agreement unless maybe the FCA did not like something and tried to interfere.Without any updates it seems that its good news that the staff of RS will have a main job and an office where they will be running the Metro side and as a second part of the operation run down the RS book but you do wonder how that will work Once the recycling of funds stops if there is to be no new investing “How It Will Work once the recycling stops”. I just realised there is an angle here for Metro. There is always an angle. Once the music stops in December, you’ve got £700m’ish of account holders in the same position as now, no RYIs, and drip-drip of money for the next several years. Everybody will be desperate to avoid logging in regularly for five years, but what can you do? Metro could just be kind, and implement a daily auto sweeper for everybody, but what’s in that for them? I reckon they’ll offer (it’s up to you!) a daily autosweeper from Holding, into any *Metro* bank account, offering say 0.5%. That would be so generous of them. Of course, you’re perfectly free to transfer money out of that to wherever you like, subject to the Ts and Cs of that Metro account. Since your alternative is to log in really regularly to avoid your money sitting in the 0% holding account, the only rational course of action is to accept, even while muttering about “taking the p*”. And suddenly, Metro get a guaranteed stream of normal bank depositors of £700m, for their £11m, on whom they expect to make money like any bank. And it’s a great book, consisting largely of medium to high net worth people, as opposed to endless streams of low-value student accounts. Metro can sell them additional investment products too. Very clever. Actually I would prefer that to the alternative. Perhaps you should suggest this to MB in case they have not thought of it - or possibly don't understand the withdrawal scenario.
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Post by diversifier on Aug 21, 2020 16:32:58 GMT
Out of interest, is there any particular reason why you assume 'no RYIs'? RYIs in Access are totally stalled now, ie lending exceeds reinvestment set. I doubt reinvestment is going to increase, because there is no reason for Metro to increase the interest rates if it’s closed to new lenders. Is your point that once Metro take over, you think they will stop lending out investor money, and lend their own? Perhaps there is a reason for that, but I can’t think why they’d choose to do so?
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chris1200
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Post by chris1200 on Aug 21, 2020 16:38:55 GMT
Out of interest, is there any particular reason why you assume 'no RYIs'? RYIs in Access are totally stalled now, ie lending exceeds reinvestment set. I doubt reinvestment is going to increase, because there is no reason for Metro to increase the interest rates if it’s closed to new lenders. Is your point that once Metro take over, you think they will stop lending out investor money, and lend their own? Perhaps there is a reason for that, but I can’t think why they’d choose to do so? (Well, as has been discussed in this and other threads, it seems pretty certain that the p2p element of RS ends for new lending from the point of acquisition (i.e. the p2p loanbook goes into wind-down). I'm operating under that premise, and it looked like you were too in your post? I mean, we know that MB will be funding lending from their banking deposits... they've said as much themselves.) My point is that everyone seems to be assuming that re-investment and RYI requests will be halted after the acquisition (including your post above), but I don't think we know that for sure - so wondered if there was any particular reason you were assuming this.
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aju
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Post by aju on Aug 21, 2020 16:45:52 GMT
RYIs in Access are totally stalled now, ie lending exceeds reinvestment set. I doubt reinvestment is going to increase, because there is no reason for Metro to increase the interest rates if it’s closed to new lenders. Is your point that once Metro take over, you think they will stop lending out investor money, and lend their own? Perhaps there is a reason for that, but I can’t think why they’d choose to do so? (Well, as has been discussed in this and other threads, it seems pretty certain that the p2p element of RS ends for new lending from the point of acquisition (i.e. the p2p loanbook goes into wind-down). I'm operating under that premise, and it looked like you were too in your post? I mean, we know that MB will be funding lending from their banking deposits... they've said as much themselves.) My point is that everyone seems to be assuming that re-investment and RYI requests will be halted after the acquisition (including your post above), but I don't think we know that for sure - so wondered if there was any particular reason you were assuming this. RS are definitely still taking on borrowers requests as that is what is feeding the LV figures day to day if the message I posted that I got from RS today is anything to go by see here just before todays post of RS releases.
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chris1200
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Post by chris1200 on Aug 21, 2020 16:47:24 GMT
(Well, as has been discussed in this and other threads, it seems pretty certain that the p2p element of RS ends for new lending from the point of acquisition (i.e. the p2p loanbook goes into wind-down). I'm operating under that premise, and it looked like you were too in your post? I mean, we know that MB will be funding lending from their banking deposits... they've said as much themselves.) My point is that everyone seems to be assuming that re-investment and RYI requests will be halted after the acquisition (including your post above), but I don't think we know that for sure - so wondered if there was any particular reason you were assuming this. They definitely still taking on borrowers requests as that is what is feeding the LV figures day to day if the message I posted that I got from RS today is anything to go by see here just before todays post of RS releases. Thanks, aju - but I'm talking about post-acquisition completion, rather than now. I'm obviously aware that they're still doing new lending right now - I've commented on how this is causing detriment to RYI processing in A/P/M more times than I can count 
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aju
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Post by aju on Aug 21, 2020 16:51:30 GMT
They definitely still taking on borrowers requests as that is what is feeding the LV figures day to day if the message I posted that I got from RS today is anything to go by see here just before todays post of RS releases. Thanks, aju - but I'm talking about post-acquisition completion, rather than now. I'm obviously aware that they're still doing new lending right now - I've commented on how this is causing detriment to RYI processing in A/P/M more times than I can count My memory is useless but yes I think I have got that point, you could read it its not just about borrowing and LV. They definitely mentioned APM too.
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Post by diversifier on Aug 21, 2020 17:38:31 GMT
RYIs in Access are totally stalled now, ie lending exceeds reinvestment set. I doubt reinvestment is going to increase, because there is no reason for Metro to increase the interest rates if it’s closed to new lenders. Is your point that once Metro take over, you think they will stop lending out investor money, and lend their own? Perhaps there is a reason for that, but I can’t think why they’d choose to do so? (Well, as has been discussed in this and other threads, it seems pretty certain that the p2p element of RS ends for new lending from the point of acquisition (i.e. the p2p loanbook goes into wind-down). I'm operating under that premise, and it looked like you were too in your post? I mean, we know that MB will be funding lending from their banking deposits... they've said as much themselves.) My point is that everyone seems to be assuming that re-investment and RYI requests will be halted after the acquisition (including your post above), but I don't think we know that for sure - so wondered if there was any particular reason you were assuming this. I think you’re right. There isn’t any particular reason to assume that. If that’s the scenario, Metro don’t really care whether RYIs continue or not - the same amount of money leaves due to repayments per month, the question is which investors get it. The answer probably depends on how much management bandwidth the two options eat up - do they want the overhead of running a secondary market, plus any angst from regulator investigating how they do it; or do they want to take a bit of PR gunfire by stopping it explicitly. I’ve got a feeling that the official wind-down plan (not related to the acquisition) said no secondary market, although I can’t find the statement, and I suspect it’s not binding on Metro, as its a plan not a T&C.
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chris1200
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Post by chris1200 on Aug 21, 2020 17:49:45 GMT
I think you’re right. There isn’t any particular reason to assume that. If that’s the scenario, Metro don’t really care whether RYIs continue or not - the same amount of money leaves due to repayments per month, the question is which investors get it. The answer probably depends on how much management bandwidth the two options eat up - do they want the overhead of running a secondary market, plus any angst from regulator investigating how they do it; or do they want to take a bit of PR gunfire by stopping it explicitly. I’ve got a feeling that the official wind-down plan (not related to the acquisition) said no secondary market, although I can’t find the statement, and I suspect it’s not binding on Metro, as its a plan not a T&C. - we agreed on something!  Re the bit in bold - presumably that's for a wind-down in the case of the provision fund not being able to cover future defaults, right? As you suggest, I don't see that they'd necessarily need to follow this in the acquisition scenario (as long as the PF holds) - but I'll try to find the terms and see what it says. [Edit: Actually, see below] Similarly to you, I have suspicions that they might decide continuing the automatic re-invest on A/P/M (with no option to turn it off w/o being a bit clever) is a bit suspect in this scenario and change this. But they might at least still allow the option of re-investment for those who want to (or just aren't switched on enough to change their settings once they can!). In a scenario with no new lending, even if it's small, all such re-investment would be funding RYI requests, helping the queue significantly (until such time as the appetite on either or both ends finishes). Anyway, just thought it was worth highlighting this scenario. I obviously have no inside knowledge as to what's actually going to happen - they may indeed turn it all off and we just have to wait out any outstanding loans. (Edit: I might actually just ask them - they probably won't answer directly, but may as well have a go.)
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chris1200
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Post by chris1200 on Aug 21, 2020 18:13:42 GMT
Further to the above, for RS wind-down terms + plan, see Clause 20 of the T&C and the wind-down plan. As above, I think it's debatable whether these would be triggered by the acquisition, but Clause 20.1 of the T&C gives RS pretty broad discretion in this regard. The terms broadly suggest that RS may choose to halt RYI requests, but it does not say they will. In fact, the wind-down plan states " The management of sell-outs would be reviewed frequently with the intention to normalise this process at the earliest opportunity." There doesn't seem to be any explicit discussion of re-investment functionality; although given that RYI requests are impossible without re-investment occurring, the implicit suggestion is that re-investment might still be possible. At the same time, it also says " investors would be able to withdraw funds once these funds become available", which suggests at least the option of stopping re-investment would be added to A/P/M. (I also note that RS may be able to charge a wind-down management fee of up to 2% - I hadn't clocked this before, but maybe others had.) |
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Post by df on Aug 21, 2020 18:49:03 GMT
I can't stop thinking that the current issues at Ratesetter are largely caused by the investors themselves. The investors rushed to the door all in the same time, causing a stampede. What if the people actually trusted the model and supported the company in its crusade on the likes of Lloyds, RBS, Barclays and HSBC (all of them have terrible 1-star pages on Trustpilot)? If people didn't cause a stampede, there would be a natural flow of money coming in an out, allowing for the Access product to work as intended. Do we really have to blame ourselves for the current liquidity issues? I don't think people who are trying to RYI caused the problem. I personally don't have an issue with trusting the model. My strategy with RS was (and still is) regularly withdrawing returns and investing when the rates are good enough for my risk/return appetite.
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Post by scepticalinvestor on Aug 21, 2020 20:59:04 GMT
Thanks for spotting and sharing this chris1200  (I also note that RS may be able to charge a wind-down management fee of up to 2% - I hadn't clocked this before, but maybe others had.) |
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Post by diversifier on Aug 22, 2020 12:12:44 GMT
I think you’re right. There isn’t any particular reason to assume that. If that’s the scenario, Metro don’t really care whether RYIs continue or not - the same amount of money leaves due to repayments per month, the question is which investors get it. The answer probably depends on how much management bandwidth the two options eat up - do they want the overhead of running a secondary market, plus any angst from regulator investigating how they do it; or do they want to take a bit of PR gunfire by stopping it explicitly. I’ve got a feeling that the official wind-down plan (not related to the acquisition) said no secondary market, although I can’t find the statement, and I suspect it’s not binding on Metro, as its a plan not a T&C. - we agreed on something! Re the bit in bold - presumably that's for a wind-down in the case of the provision fund not being able to cover future defaults, right? (Edit: I might actually just ask them - they probably won't answer directly, but may as well Yes, I did mean that. I think it is definitely worth asking whether Metro intend to trigger the (provision fund based) wind-down plan after acquisition, due to the acquisition itself rather than the state of the PF at the time. Since the plan was originally required by the FCA, and approved it, it is something that Metro *must* have an answer for. Whatever answer they give should be binding towards the FCA. I don’t think Metro can suddenly start charging a 2% administration fee, due to any change in company *policy* alone.
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chris1200
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Post by chris1200 on Aug 22, 2020 12:30:55 GMT
Yes, I did mean that. I think it is definitely worth asking whether Metro intend to trigger the (provision fund based) wind-down plan after acquisition, due to the acquisition itself rather than the state of the PF at the time. Since the plan was originally required by the FCA, and approved it, it is something that Metro *must* have an answer for. Whatever answer they give should be binding towards the FCA. I don’t think Metro can suddenly start charging a 2% administration fee, due to any change in company *policy* alone. If you see my subsequent post, having had a look, I was wrong and it's not actually a provision fund-based wind-down. It's much broader than that. I'm not sure I'd think of it being Metro Bank charging the 2%. I don't know what legal structure they'll use for the acquisition, but it'll essentially be the same RateSetter business (in wind-down) that is charging it, and - as per my previous post - Clause 20.1 of the T&C we're all signed up to gives them very broad discretion in this regard. I don't know what they'll do or what the FCA might think (if they think anything at all), but I certainly don't think we can say for sure that they can't charge the fee.
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Post by danny101 on Aug 22, 2020 17:23:42 GMT
Does anyone think that eventually us investors will have to bear our own defaults or will Ratesetter keep doing capital haircuts to keep resuscitating the provision fund. for "the greater good" of everybody. If we do have to suffer our own defaults it will not be fair as the platform wasn't designed to diversify the risk as it relied on the provision fund kicking in. I did invest mainly in £100 chunks as I wasn't comfortable with large amounts going to one borrower but I imagine others just left it up to RS.
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