ashe
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Post by ashe on Feb 2, 2021 10:00:00 GMT
The Interest Coverage Ratio (ICR) is currently 101%. This predicts that there will be just a little more than enough to pay the contacted interest rates going forward after accounting for defaults. So, there is predicted to be a very small surplus after all loans repay. The cost of implementing a scheme to recompense lenders by a very small amount in each of the tens of thousands of loans that were subject to a rate cut would be far more expensive than the small forecast surplus would warrant. I don't think what tiny sum might be left in the provision fund is the real issue - it's more that, with the 101% ICR you mention, up to half of our interest has effectively gone towards them being able to buy our loans at now currently projected full-interest. At least ethically dubious, if not legally.
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Post by madmalcs on Feb 2, 2021 10:21:21 GMT
As the coverage ratio allows for future interest, which will no longer be available to investors, that element of the provision must surely be a gain for RS. Leavers have always left that element on the table for new investors to inherit so the result seems just a product of the provision fund structural methodology, which is as it has been for a long time. To question the fairness of any effective discount inherited by Metro appears to challenge that methodology in my view. It's a valid point of issue but I don't recall this being raised historically. In the circumstances, we should appreciate Metro Bank as it stepped in at considerable risk to them and succeeded in averting an unfolding disaster, so I don't resent this. Also, as many members have argued, since most of the consumer credit loss outcomes arising from the impending crisis have been deferred by government intervention, these may and most likely have been underestimated. That's precisely why so many of us wanted to exit not very long ago. If that is the case, the provision fund would be underfunded and Metro would have 'overpaid' for the portfolio. I think this is possible or even probable, but time will tell of course.
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jlend
Member of DD Central
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Post by jlend on Feb 2, 2021 10:31:50 GMT
Under the circumstances I think it is a very good and balanced result all round, for lenders, borrowers, RS staff, Metro and RS equity investors.
To be able to get through the last 12 months with 100% of capital intact and some interest is impressive.
To be able to sell off a property and personal loan book is impressive in the current circumstances without additional discounting.
To have safeguarded many RS jobs is impressive.
For the founders Peter and Rhydian and others to have got through numerous hickups over the last 10 years including the vehicle finance challenges is impressive. We need more people like this with integrity to take risks and grind through issues. I think they deserve everything they have earned and more. We need to be encouraging people like this.
I hope Peter, Rhydian and others at RS make a lot of money over the coming years. They deserve it.
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Post by greatboo on Feb 2, 2021 10:31:58 GMT
I'd like to thank Ratesetter and wish all of their staff all the best in the future.
Having been invested for a few years, I've got all of my capital back, and most of the interest.
Considering this was never a risk-free investment, and despite the most challenging circumstances imaginable (who would predict most of the economy shutting down for months on end?) - Ratesetter have steered us through with no capital losses - a much better outcome for investors than most of their competitors achieved.
Thank you Ratesetter!
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Greenwood2
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Post by Greenwood2 on Feb 2, 2021 10:45:02 GMT
As the coverage ratio allows for future interest, which will no longer be available to investors, that element of the provision must surely be a gain for RS. Leavers have always left that element on the table for new investors to inherit so the result seems just a product of the provision fund structural methodology, which is as it has been for a long time. To question the fairness of any effective discount inherited by Metro appears to challenge that methodology in my view. It's a valid point of issue but I don't recall this being raised historically. In the circumstances, we should appreciate Metro Bank as it stepped in at considerable risk to them and succeeded in averting an unfolding disaster, so I don't resent this. Also, as many members have argued, since most of the consumer credit loss outcomes arising from the impending crisis have been deferred by government intervention, these may and most likely have been underestimated. That's precisely why so many of us wanted to exit not very long ago. If that is the case, the provision fund would be underfunded and Metro would have 'overpaid' for the portfolio. I think this is possible or even probable, but time will tell of course. I think many lenders decided to leave because RS announced it was halving interest rates and not making any new loans, leaving lenders with the decision to stay to the bitter end and risk the PF depleting, or selling out often at some cost. I would have stayed in, with the interest haircut (for a while anyway) but why stay when they are closing down? If the PF were still underfunded I don't think Metro would have bought the remaining portfolio now, it would have been left with lenders and with an interest rate haircut, until such time as the PF was funded.
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andy159
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Post by andy159 on Feb 2, 2021 10:49:33 GMT
While RS has generally been a good service, this deal stinks.
As the article states, it is a related party transaction. The loan book should at least have been auctioned off (or been valued as such) - which would have generated more money FOR US - the people who have just ridden out the main risk time, when interest rates were cut to build up the provision fund.
The article makes clear it is a great deal for Metro - meaning they are getting assets on the cheap - from us.
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Post by oppsididitagain on Feb 2, 2021 11:01:53 GMT
Hindsight is a wonderful thing. I think RS did a good job in the end. You can only compare them to the competition.
However, I do wonder if we didnt create a run on RS, the mass of withdrawals, the panic, people paying the withdrawal fee's, etc etc maybe RS would still be here ? Where did those mass of withdrawals go, reading the forums at the time, into a FIXED rate saving with Marcus I mean Goldman Sachs ?? I wonder what GS did with the loan of cash at 1-1.4% when Stock markets have risen by 30% since march, and now people cant put enough cash in to the stock markets.. !!
If you are so upset about the deal metro got, its simple. Go and buy Metrobank shares. :-)
Its a shame its gone, it fitted into a nice space the financial system didnt account for. IMHO I'm still with RS got just under 5K in the 5Yrs with 30months to run at 6.6%. I guess I will get that back in April when the book is finally closed.
Good luck to everyone in the future
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jaswells
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Post by jaswells on Feb 2, 2021 11:04:22 GMT
While RS has generally been a good service, this deal stinks.
As the article states, it is a related party transaction. The loan book should at least have been auctioned off (or been valued as such) - which would have generated more money FOR US - the people who have just ridden out the main risk time, when interest rates were cut to build up the provision fund.
The article makes clear it is a great deal for Metro - meaning they are getting assets on the cheap - from us.
But surely you need to look at the bigger picture. Ratesetter was clearly a very troubled company, its losses were possibly heralding the death knell for the company and Metro bank stepped in to buy them for a meagre 2.5 million. This was done in the knowledge they would get a a good deal on the loan book. I am sure many are just relieved a route out was made available.
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jlend
Member of DD Central
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Post by jlend on Feb 2, 2021 11:07:43 GMT
While RS has generally been a good service, this deal stinks.
As the article states, it is a related party transaction. The loan book should at least have been auctioned off (or been valued as such) - which would have generated more money FOR US - the people who have just ridden out the main risk time, when interest rates were cut to build up the provision fund.
The article makes clear it is a great deal for Metro - meaning they are getting assets on the cheap - from us.
I think it is a great balanced deal all round under the circumstances. I am pleased Metro and RS have been able to work through the last year and come up with a good deal for them and their staff. I am pleased they have been able come out of this with a good deal that gives them a fighting chance of Metro being successful over the coming years. I am more than happy with the outcome and don't in any way feel that I have been taken advantage of in the Metro deal or the interest rate cut over the last year.
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wapping35
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Post by wapping35 on Feb 2, 2021 11:17:42 GMT
All in I have done very well with my investment at RS (for the last 8 years) and made a good return.
4.5 years ago I commenced the run down of my investment due to doubts about the PF (the acceptance of it running below 125%), transparency (or lack of) particularly the lack of an third party audit of the PF projections and finally the T&C's really allowing RS to act as it wished. The T&C concern being more of a concern with the under 125% PF position and transparency/audit issue.
I was due to be fully out at end of May 2021 so this change, for me, makes little difference and indeed probably makes closing the account easier. I am getting over 6% (or 3% during most of 2020).
In the end I am pleased with my RS investment but also pleased to leave RS.
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
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Post by beagle on Feb 2, 2021 11:20:26 GMT
While RS has generally been a good service, this deal stinks.
As the article states, it is a related party transaction. The loan book should at least have been auctioned off (or been valued as such) - which would have generated more money FOR US - the people who have just ridden out the main risk time, when interest rates were cut to build up the provision fund.
The article makes clear it is a great deal for Metro - meaning they are getting assets on the cheap - from us.
of course it is a great deal for Metro, as a bank they can add a good yielding loan book to their portfolio and boost profits. why would they not want to do that. ratesetter it works well for too - they survive investors get their money back - in full. hard to see a better way out
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andy159
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Post by andy159 on Feb 2, 2021 11:28:13 GMT
26 minutes ago andy159 said: While RS has generally been a good service, this deal stinks.
As per news reports - www.proactiveinvestors.co.uk/companies/news/940108/ -Metro are buying a loan book with an average life of 2 years that is paying 8% - fully provisioned - FOR PAR!
As the article states, it is a related party transaction. The loan book should at least have been auctioned off (or been valued as such) - which would have generated more money FOR US - the people who have just ridden out the main risk time, when interest rates were cut to build up the provision fund.
The article makes clear it is a great deal for Metro - meaning they are getting assets on the cheap - from us.
jaswells said -
But surely you need to look at the bigger picture. Ratesetter was clearly a very troubled company, its losses were possibly heralding the death knell for the company and Metro bank stepped in to buy them for a meagre 2.5 million. This was done in the knowledge they would get a a good deal on the loan book. I am sure many are just relieved a route out was made available.
I don't remember seeing an announcement that Metro would take over our loans on the cheap when it purchased RS.
As for wishing the RS staff well - I do - but I also didn't see any charity clause which states that my investment returns, for which I risked my money, should go to support Metro and RS.
As for buying Metro shares - I would have if I had known - as their shares have risen on this news - unsuprisingly given it is a great deal for them (until perhaps the FCA considers if this deal is fair)
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
Posts: 670
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Post by beagle on Feb 2, 2021 11:51:58 GMT
26 minutes ago andy159 said: While RS has generally been a good service, this deal stinks.
As per news reports - www.proactiveinvestors.co.uk/companies/news/940108/ -Metro are buying a loan book with an average life of 2 years that is paying 8% - fully provisioned - FOR PAR!
As the article states, it is a related party transaction. The loan book should at least have been auctioned off (or been valued as such) - which would have generated more money FOR US - the people who have just ridden out the main risk time, when interest rates were cut to build up the provision fund.
The article makes clear it is a great deal for Metro - meaning they are getting assets on the cheap - from us.
jaswells said -
But surely you need to look at the bigger picture. Ratesetter was clearly a very troubled company, its losses were possibly heralding the death knell for the company and Metro bank stepped in to buy them for a meagre 2.5 million. This was done in the knowledge they would get a a good deal on the loan book. I am sure many are just relieved a route out was made available.
I don't remember seeing an announcement that Metro would take over our loans on the cheap when it purchased RS.
As for wishing the RS staff well - I do - but I also didn't see any charity clause which states that my investment returns, for which I risked my money, should go to support Metro and RS.
As for buying Metro shares - I would have if I had known - as their shares have risen on this news - unsuprisingly given it is a great deal for them (until perhaps the FCA considers if this deal is fair)
I don't remember seeing an announcement that Metro would take over our loans on the cheap when it purchased RS. Why would they say this? It is not in their best interest. As for wishing the RS staff well - I do - but I also didn't see any charity clause which states that my investment returns, for which I risked my money, should go to support Metro and RS. It is not supporting Ratesetter staff or metro staff it supported you and the pool of investors. if ratesetter collapsed which it would have you would have administrators taking a chunk of money and you would certainly be out of pocket.
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jlend
Member of DD Central
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Post by jlend on Feb 2, 2021 11:54:32 GMT
26 minutes ago andy159 said: While RS has generally been a good service, this deal stinks.
As per news reports - www.proactiveinvestors.co.uk/companies/news/940108/ -Metro are buying a loan book with an average life of 2 years that is paying 8% - fully provisioned - FOR PAR!
As the article states, it is a related party transaction. The loan book should at least have been auctioned off (or been valued as such) - which would have generated more money FOR US - the people who have just ridden out the main risk time, when interest rates were cut to build up the provision fund.
The article makes clear it is a great deal for Metro - meaning they are getting assets on the cheap - from us.
jaswells said -
But surely you need to look at the bigger picture. Ratesetter was clearly a very troubled company, its losses were possibly heralding the death knell for the company and Metro bank stepped in to buy them for a meagre 2.5 million. This was done in the knowledge they would get a a good deal on the loan book. I am sure many are just relieved a route out was made available.
I don't remember seeing an announcement that Metro would take over our loans on the cheap when it purchased RS.
As for wishing the RS staff well - I do - but I also didn't see any charity clause which states that my investment returns, for which I risked my money, should go to support Metro and RS.
As for buying Metro shares - I would have if I had known - as their shares have risen on this news - unsuprisingly given it is a great deal for them (until perhaps the FCA considers if this deal is fair)
I don't see it that way. I don't think we are the only people that have taken a risk, and I think we have come out of it fairly under the circumstances. The RS equity investors have taken a hit. Many of the RS staff could have earned more elsewhere but took the risk. Peter, Rhydian and other RS staff have all taken risks over the last 10 years in sticking with RS, RS equity investors have taken risks, Metro Bank took a risk initially and now. The new management in Metro Bank have taken risks.
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ashe
Posts: 53
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Post by ashe on Feb 2, 2021 11:59:38 GMT
It is not supporting Ratesetter staff or metro staff it supported you and the pool of investors. if ratesetter collapsed which it would have you would have administrators taking a chunk of money and you would certainly be out of pocket.
Of course, but people are able to consider today's action separately from the other actions taken.
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