am
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Post by am on Dec 10, 2015 19:47:25 GMT
By exchange rate risk we don't mean the costs of converting cash from sterling to euros and back again, though that is an additional cost which eats into our margins on euro-denominated loans, but to the risk that the relative values of the currencies might move in the wrong direction over the duration of the loan. If we make 13% in interest over two years, but the pound gains in value by 10% against the euro over than period our effective APR is reduced to approximately 1.5% before other costs are taking into account. If we're paying tax in Spain on the interest that might put us into loss making territory. (That raises another question which I don't know the answer to - what is the tax treatment of cross-border P2P loans.)
Of course the pound might fall in value against the euro instead, which would enhance returns.
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shimself
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Post by shimself on Dec 10, 2015 19:56:58 GMT
By exchange rate risk we don't mean the costs of converting cash from sterling to euros and back again, though that is an additional cost which eats into our margins on euro-denominated loans, but to the risk that the relative values of the currencies might move in the wrong direction over the duration of the loan. If we make 13% in interest over two years, but the pound gains in value by 10% against the euro over than period our effective APR is reduced to approximately 1.5% before other costs are taking into account. If we're paying tax in Spain on the interest that might put us into loss making territory. (That raises another question which I don't know the answer to - what is the tax treatment of cross-border P2P loans.) Of course the pound might fall in value against the euro instead, which would enhance returns. I live in €uroland, and so it would be reasonable for me. For someone in poundland (sorry) with no use for capital in €uros it would be really silly, the rate has gone between 1.4 and 1.01 in the 7 years I have been here.
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Post by batchoy on Dec 10, 2015 23:12:21 GMT
Hello Toms, I too have a couple of questions at this stage: 1) Are the properties located in Spain? If not, where are they located and how come are they valued and originated from Spain? If yes, how come Viventor is based in Latvia? 2) Does Viventor hold an exclusive relationship with the loan originators? 3) Could you please explain the low LTVs? Does Viventor hold 1st charge on the properties? 4) Is Viventor simply the operator of the platform or do you have responsibility in terms of risk assessment? 5) What % stake, if any, does Viventor hold in the loans? Many thanks in advance! Hi, 1) Yes, all the properties are located in Spain - you can see more details attached to every individual loan. Viventor has staff both in Latvia and Spain. As we onboard new originators, the list of countries will expand. Currently, it is only Spain. 2) We have partnership agreements in place with both loan originators currently on the platform, and - yes, we are the only platform they are cooperating with. 3) The low LTV's are mainly due to the market specifics in Spain. The supply of non-bank financing is considerably smaller than the demand. And also, of course, it is the policy of the loan originators not to go above 50% LTV. Viventor does not hold any charges on the properties. 4) Viventor is mainly operator of the platform, but we carefully evaluate every single deal prior to listing it on the platform. 5) Viventor does not hold any stake. However, all the loans are pre-funded 100% by the loan originators, and they keep 5% stake in every single deal at the very least. Thus, they clearly have their skin in the game. Thanks for the questions, hope this helps! Toms Maybe it's a lack of understanding of terminology, which is worrying in itself, but if you have no charge over the property then the loan is unsecured and any LTVs you state are meaningless since Viventor will have no more right to any funds from the sale of the property than any other of the borrower's creditors and if one or more companies have charges even less right to the sale funds. Personally I want nothing more to do with unsecured Spanish loans having been burnt on Bondora with Spainards who either don't repay anything or make the first few repayments and then stop.
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Post by red_panda on Dec 11, 2015 0:06:56 GMT
viventor ... Are you FCA regulated? I couldn't see that you are from your site. If not, would you invest in another platform that wasn't regulated? Also if you are not FCA regulated how are you allowed to market yourselves to UK investors? Wait am I missing something? Since when do EU fintech companies need to be UK-FCA regulated to market to UK investors? UK is part of the EU, hence any EU company, whether its fintech or not can market to UK customers, that is my understanding, or am I wrong? Every EU country has its own FCA equivalent, and I'm sure viventor, mintos or twino abide by whatever regulation is imposed on them by the Latvian Financial and Capital Market Commission.
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Post by toms viventor on Dec 11, 2015 9:19:20 GMT
lb - as for the moment, we are not regulated by FCA. We understand, however, that this is a great addition to platform's overall credibility. As red_panda correctly pointed out - we are complying by the appropriate legislative acts of The Republic of Latvia.
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Post by toms viventor on Dec 11, 2015 10:00:20 GMT
By exchange rate risk we don't mean the costs of converting cash from sterling to euros and back again, though that is an additional cost which eats into our margins on euro-denominated loans, but to the risk that the relative values of the currencies might move in the wrong direction over the duration of the loan. If we make 13% in interest over two years, but the pound gains in value by 10% against the euro over than period our effective APR is reduced to approximately 1.5% before other costs are taking into account. If we're paying tax in Spain on the interest that might put us into loss making territory. (That raises another question which I don't know the answer to - what is the tax treatment of cross-border P2P loans.) Of course the pound might fall in value against the euro instead, which would enhance returns. Fair point made about the exchange rate. However, there is a possibility to invest in loans with smaller time to maturity. For example, at the moment we have 24 loans with maturity of 12 months or lower available. Concerning the taxes - according to EU regulation, we as a platform are responsible to either withhold the tax on earnings (the rate applied depends on the country of loan origination, in Spain it is 19.50% of the profit), either be able to verify to the tax authorities that an investor is indeed a resident of a EU member country. For this, we need to receive a copy of tax certificate or residence certificate. Usually, such document is issued by the local tax authority. In that case, no taxes are withholded from our side.
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Post by toms viventor on Dec 11, 2015 10:11:42 GMT
Hi, 1) Yes, all the properties are located in Spain - you can see more details attached to every individual loan. Viventor has staff both in Latvia and Spain. As we onboard new originators, the list of countries will expand. Currently, it is only Spain. 2) We have partnership agreements in place with both loan originators currently on the platform, and - yes, we are the only platform they are cooperating with. 3) The low LTV's are mainly due to the market specifics in Spain. The supply of non-bank financing is considerably smaller than the demand. And also, of course, it is the policy of the loan originators not to go above 50% LTV. Viventor does not hold any charges on the properties. 4) Viventor is mainly operator of the platform, but we carefully evaluate every single deal prior to listing it on the platform. 5) Viventor does not hold any stake. However, all the loans are pre-funded 100% by the loan originators, and they keep 5% stake in every single deal at the very least. Thus, they clearly have their skin in the game. Thanks for the questions, hope this helps! Toms Maybe it's a lack of understanding of terminology, which is worrying in itself, but if you have no charge over the property then the loan is unsecured and any LTVs you state are meaningless since Viventor will have no more right to any funds from the sale of the property than any other of the borrower's creditors and if one or more companies have charges even less right to the sale funds. Personally I want nothing more to do with unsecured Spanish loans having been burnt on Bondora with Spainards who either don't repay anything or make the first few repayments and then stop. Hi, Sorry for not elaborating properly before. Viventor does not hold any charges, but the loan originators do. Every single deal is signed with Notary, careful screening of every borrower has been carried out, and full documentation is collected prior signing a deal. The product here is nothing to compare with the loans issued by Bondora. Toms
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homes119
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Post by homes119 on Dec 11, 2015 10:28:23 GMT
Hi, 1) Yes, all the properties are located in Spain - you can see more details attached to every individual loan. Viventor has staff both in Latvia and Spain. As we onboard new originators, the list of countries will expand. Currently, it is only Spain. 2) We have partnership agreements in place with both loan originators currently on the platform, and - yes, we are the only platform they are cooperating with. 3) The low LTV's are mainly due to the market specifics in Spain. The supply of non-bank financing is considerably smaller than the demand. And also, of course, it is the policy of the loan originators not to go above 50% LTV. Viventor does not hold any charges on the properties. 4) Viventor is mainly operator of the platform, but we carefully evaluate every single deal prior to listing it on the platform. 5) Viventor does not hold any stake. However, all the loans are pre-funded 100% by the loan originators, and they keep 5% stake in every single deal at the very least. Thus, they clearly have their skin in the game. Thanks for the questions, hope this helps! Toms Maybe it's a lack of understanding of terminology, which is worrying in itself, but if you have no charge over the property then the loan is unsecured and any LTVs you state are meaningless since Viventor will have no more right to any funds from the sale of the property than any other of the borrower's creditors and if one or more companies have charges even less right to the sale funds. Personally I want nothing more to do with unsecured Spanish loans having been burnt on Bondora with Spainards who either don't repay anything or make the first few repayments and then stop. Is the investor contract with Viventor or with the loan originator? What type of charge does the originator have over the properties? Is it 1st and only charge? If anyone in the forum could enlighten us on whether Viventor's model is similar to Twino's and Mintos'?
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Post by toms viventor on Dec 11, 2015 11:07:40 GMT
homes119, the Assignment Agreement is between investor and the loan originator, yes. The originators hold 1st charge on the property, and in majority of cases it is also the only charge. What concerns comparison between Viventor and Twino/Mintos - one of the main differences is the loan product offered. There are quite a few similarities however, and models are alike.
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Post by batchoy on Dec 11, 2015 13:36:01 GMT
Maybe it's a lack of understanding of terminology, which is worrying in itself, but if you have no charge over the property then the loan is unsecured and any LTVs you state are meaningless since Viventor will have no more right to any funds from the sale of the property than any other of the borrower's creditors and if one or more companies have charges even less right to the sale funds. Personally I want nothing more to do with unsecured Spanish loans having been burnt on Bondora with Spainards who either don't repay anything or make the first few repayments and then stop. Hi, Sorry for not elaborating properly before. Viventor does not hold any charges, but the loan originators do. Every single deal is signed with Notary, careful screening of every borrower has been carried out, and full documentation is collected prior signing a deal. The product here is nothing to compare with the loans issued by Bondora. Toms Which then raises the question of where do Viventor and those who invest in these loans via Viventor stand in order of priority with regard to the loan originator. The originator may have 5% in the loan but if they have first first call on any funds their skin is hardly exposed, and there is no incentive for them to recover any more than than their 5% and the recovery costs. Similarly if Vinetor's platform costs stand above those of lenders.
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Post by toms viventor on Dec 11, 2015 14:07:49 GMT
Hi, Sorry for not elaborating properly before. Viventor does not hold any charges, but the loan originators do. Every single deal is signed with Notary, careful screening of every borrower has been carried out, and full documentation is collected prior signing a deal. The product here is nothing to compare with the loans issued by Bondora. Toms Which then raises the question of where do Viventor and those who invest in these loans via Viventor stand in order of priority with regard to the loan originator. The originator may have 5% in the loan but if they have first first call on any funds their skin is hardly exposed, and there is no incentive for them to recover any more than than their 5% and the recovery costs. Similarly if Vinetor's platform costs stand above those of lenders. Just to clarify - speaking about the originators having first charge on the borrower's underlying collateral (property) in a case of default. While I cannot speak on behalf of the loan originators and speculate about their intentions, I can assure you that we have strict partnership agreements in place, which assure that all stakes are treated as equal, indifferently from the owner. All in all, in order to recover their stake (5% or larger - doesn't matter), the loan originators have to exercise the underlying property, not going below the loan amount. Considering the low LTV levels (<50%; on average <30%), it is rather realistic assumption that stake owners in defaulting loans will come out as winners, receiving more than projected interest. Also, we have Buyback Guarantee in place, assuring that originators will buy back stakes delinquent for 60 days or more. Do let me know, if there is still some uncertainty regarding this! Toms
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Post by Deleted on Dec 11, 2015 16:31:54 GMT
is it me or does this all sound "difficult to understand", I'm not sure why you want to market in the UK given the cross currency issues given the other territories available but hey...
Toms, can define what you mean by the term loan "originator"
Just to clarify the meaning; let us assume a loan defaults and only 50% of the loan is recouped would the (5%) originator get the
1) 5% of the 100% 2) 5% of the 50% 3) 0% ?
just trying to get an idea of how much skin they have in the game
can you expand on this "While I cannot speak on behalf of the loan originators and speculate about their intentions, I can assure you that we have strict partnership agreements in place, which assure that all stakes are treated as equal, indifferently from the owner."?
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Post by toms viventor on Dec 11, 2015 16:59:24 GMT
is it me or does this all sound "difficult to understand", I'm not sure why you want to market in the UK given the cross currency issues given the other territories available but hey... Toms, can define what you mean by the term loan "originator" Just to clarify the meaning; let us assume a loan defaults and only 50% of the loan is recouped would the (5%) originator get the 1) 5% of the 100% 2) 5% of the 50% 3) 0% ? just trying to get an idea of how much skin they have in the game can you expand on this "While I cannot speak on behalf of the loan originators and speculate about their intentions, I can assure you that we have strict partnership agreements in place, which assure that all stakes are treated as equal, indifferently from the owner."? Thanks for the questions. Our aim is to serve investors from all over Europe, UK in that count. By loan originator I mean the company that has issued conducted borrower screening and assessment, gathered all the necessary documentation, signed the loan agreement and pre-funded the loan in full. In the case you describe, the answer would be (2) - 5% of the 50%. However, taking the average LTV (30%), this would mean that the underlying real estate would be sold at only 15% of its market value. Little to mention, such case is borderline impossible. About skin in the game - every loan is 100% pre-funded by loan originators, which is a fair indicator about them "having their skin in the game". Lastly, about elaborating: according to the Partnership Agreement, should a default occur and sale of underlying asset take place, all proceeds from the sale shall be distributed amongst the investors having stake in the particular loan, proportionally to their stake owned. Does not matter, if 50% or 250% of the loan is recouped. However, there is Buyback Guarantee in place for all loans currently listed, so rest assured that your investment will be returned. If there is still confusion, please let me know. Have a good weekend! Toms
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Post by batchoy on Dec 11, 2015 17:20:17 GMT
While I cannot speak on behalf of the loan originators and speculate about their intentions, I can assure you that we have strict partnership agreements in place, which assure that all stakes are treated as equal, indifferently from the owner. "assure that all stakes are treated as equal" or "ensure that all stakes are treated as equal" ?
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Post by toms viventor on Dec 11, 2015 18:15:08 GMT
Thank you, seems that my mind has one foot into the weekend already. Main thing is we understood each other
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