p2pmaster
investment is life.
Posts: 128
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Post by p2pmaster on Jan 19, 2017 8:39:15 GMT
Lendo is too young for me and too short track record, hence I have excluded them from my AI. Banknote have published their financials, profitability is okay, gearing is reasonable, aging is moderate. I have a part of my investment in it.
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Post by extremis on Jan 19, 2017 10:41:36 GMT
True, Banknote is a more mature company than Lendo. It's the new structure under which they issue their loans that bothers me: we no longer have a direct claim to the borrowers' loans, but rather to the company itself, meaning if it ever goes under we will be put in the queue with other creditors and probably get very little (or nothing) back.
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fric
Member of DD Central
Posts: 199
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Post by fric on Jan 19, 2017 11:20:39 GMT
True, Banknote is a more mature company than Lendo. It's the new structure under which they issue their loans that bothers me: we no longer have a direct claim to the borrowers' loans, but rather to the company itself, meaning if it ever goes under we will be put in the queue with other creditors and probably get very little (or nothing) back. As I have said before - I believe its due to the fact that there is no p2p lending legislation in place. I bet they cannot give you a claim for the actual loan in a legal way. And this is just a workaround. Also - when we first heard this with Hipocredit - it was at the same time as Hipocredit renewed their lending licence. Coincidence? I think not.
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Post by southseacompany on Jan 19, 2017 14:10:46 GMT
Banknote have published their financials, profitability is okay, gearing is reasonable, aging is moderate. I have a part of my investment in it. I also have investments in Banknote loans, but reading the 2015 accounts (the newest ones available), I feel slightly uneasy about the fact that not only did Banknote's shareholders pay the company's entire profit to themselves as dividends, they have also borrowed 0.9 million euros from the company at rates of 3% - 4% while at the same time the company has been raising funds on Mintos at interest rates of 12% - 13%. Of course it's their money, but I can't help but wonder if a haste to get it out suggests lack of confidence in the company's long term prospects.
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Post by extremis on Jan 19, 2017 14:27:12 GMT
True, Banknote is a more mature company than Lendo. It's the new structure under which they issue their loans that bothers me: we no longer have a direct claim to the borrowers' loans, but rather to the company itself, meaning if it ever goes under we will be put in the queue with other creditors and probably get very little (or nothing) back. As I have said before - I believe its due to the fact that there is no p2p lending legislation in place. I bet they cannot give you a claim for the actual loan in a legal way. And this is just a workaround. Also - when we first heard this with Hipocredit - it was at the same time as Hipocredit renewed their lending licence. Coincidence? I think not. Of course, the recent change in loan structure was not by choice but as a workaround to legal matters. Still it makes no difference to me as i now get the same interest rates on higher risk loans.
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Post by mopcku on Jan 22, 2017 0:48:12 GMT
As I have said before - I believe its due to the fact that there is no p2p lending legislation in place. I bet they cannot give you a claim for the actual loan in a legal way. And this is just a workaround. Also - when we first heard this with Hipocredit - it was at the same time as Hipocredit renewed their lending licence. Coincidence? I think not. Of course, the recent change in loan structure was not by choice but as a workaround to legal matters. Still it makes no difference to me as i now get the same interest rates on higher risk loans.
For me the main problem is the lack of diversification. The p2p concept is/was good because of the possibility to diversify between many small more or less independent borrowers (risks). Now with these changes there is no diversification and i see this like company lending - we are lending to the originators, we finance their lending activity.
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Post by southseacompany on Jan 22, 2017 2:29:28 GMT
The p2p concept is/was good because of the possibility to diversify between many small more or less independent borrowers (risks). Now with this changes there is no diversification and i see this like company lending - we are lending to the originators, we finance their lending activity. I completely agree, but I think de facto that is already the case with all the personal loan originators. If Lendo goes under, would you really take some unknown guy in Georgia to court over an unpaid 10 euro loan? Come on.
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p2pmaster
investment is life.
Posts: 128
Likes: 54
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Post by p2pmaster on Jan 22, 2017 7:21:41 GMT
Usually, if p2p company goes under, the bankruptcy administrator or investors' representative takes control of loan book administration and goes after each borrower to recover the maximum. It is costly, of course, but you might expect to recover a part of your money (e.g. Trustbuddy is talking about 25-40% recovery of invested funds, but it is a fraud case and hardly comparable).
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Post by extremis on Jan 22, 2017 11:04:07 GMT
Imho, it all depends on the specific loan details (i.e. loan amount, collateral, etc.). If we talk about personal (unsecured) loans, given that the average amount is ~200 EUR (many of them are under 100 EUR) i doubt if the loan originator ever takes any legal action against the borrower if he/she doesn't pay. More probably they simply write off the debt and compensate for their losses from other performing loans. If that is what already happens with personal loan originators, can we really expect that a third party that will take over in case of default would do better? Would they have the necessary money (especially when no new loans would be issued to cover for old ones losses) to take to court thousands borrowers that owe a few hundred Euros each? So, basically, i think southseacompany is right, direct claim or not, if the loan originator goes under it wouldn't make much difference.
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p2pmaster
investment is life.
Posts: 128
Likes: 54
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Post by p2pmaster on Jan 22, 2017 12:02:23 GMT
Defaulted loans have high penalty fees, running interest rates and thus grows EUR amount quickly. Hence, it becomes economically feasible to do recovery after some growing the value of defaulted loans. Usually, defaulted loans are either sold for 15-50% of principal value to third-parties, collected in-house or outside based on success fees.
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fric
Member of DD Central
Posts: 199
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Post by fric on Jan 23, 2017 7:44:37 GMT
But the Administrator might just decide to sell the loans as investment portfolios. Also he might divide bad loans (the defaulted ones) from active ones and sell those portfolios separately.
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