Will Citi Buy Lending Club Loans? What Does this Mean for the Marketplace Lending Industry?

by Alex Johnson 0

On the heels of the recent marketplace lending mishigas (which hit Lending Club especially hard) comes a trickle of good news:

“Shares in Lending Club (NYSE:LC) jumped last week as chatter popped up in a report in WSJ.com that Citigroup may be purchasing, or perhaps providing financing, for their loans. This is the second round of positive news as it was recently revealed that Chinese billionaire Tianqiao Chen picked up a significant stake in the largest US marketplace lending platform. This investment may not be unique as we have heard rumors that other Chinese investors may be looking for discounted assets in the marketplace lending sector.”

I would encourage you to read this entire article from Crowdfund Insider. Parts of it are very insightful:

“What was lost in the cacaphony of pronouncments was the fact that Lending Club results for Q1, were frankly pretty good. Meeting analyst expectations during a challenging economic quarter, Lending Club loan originations in Q1 were $2.75 billion, compared to $1.64 billion in the same period last year, an increase of 68% (year-over-year). The Lending Club platform has now facilitated nearly $19 billion in loans since inception.”

“Beyond the problematic issues with the former CEO , the challenge for online lenders has been the lack of diversification in capital channels.”

While other parts are laughably biased:

“While naysayers point to singular points of failure or systemic challenges, much of what the online lenders are doing today is quite similar to their bricks and motar ancestors. It is just far more efficient and consumer/SME friendly than stodgy old banks.”

“The more pressing issue is one of regulatory risk. While some public officials mouth the words of understanding and consumer benefit this may not be the case. All too frequently these officials take the approach of “why waste a crisis” when it provides an opportunity to expand their own bureaucratic domain and power. Now that is serious risk.”

Overview by Alex Johnson, Director, Credit Advisory Service at Mercator Advisory Group

Read the full story here