News
Marketplace lending moving ahead
A number of positive developments have boosted the marketplace lending sector this week. Among them is the publication by the OCC of further guidelines for fintech firms applying for bank charter applications.
The extra information is included as a supplement to the OCC's existing licensing manual and it explains how the licensing standards and requirements will be applied in existing regulations and policies to fintech companies applying for special purpose national bank charters. The supplement describes unique factors the agency will consider in evaluating applications from fintech companies, such as promoting fair access and fair treatment.
It also outlines the agency's approach to supervising those fintech firms that become national banks. The OCC is accepting comments on this document through close of business on 14 April.
The recovery in marketplace lending securitisation activity has made further gains with the pricing of two US MPL deals (SCI 6 March). Kabbage printed its Kabbage Asset Securitisation Series 2017-1, a US$500m securitisation of SME loans, while Arcadia Receivables Credit Trust 2017-1 closed - a US$213.13m ABS backed by prime Lending Club loans.
Elsewhere, in the UK, Moody's has upgraded its ratings on Funding Circle's debut ABS, SBOLT 2016-1, due to a high level of repayments. The agency has raised its ratings to Aa2 (from Aa3) on the £87.8m class A notes, A1 (from A2) on the £6.1m class Bs, Baa1 (from Baa2) on the £7.8m class Cs and Baa3 (from Ba1) on the £6.3m class Ds.
Meanwhile, Moody's has also released a paper comparing the US and Chinese MPL ABS markets. The rating agency notes that the two sectors have both experienced a number of governance and misconduct issues over the past two years, leading to investor pull-back at certain points, followed by a period of transformation.
Moody's suggests that key differences between the two sectors include marketplace lending challenging the definition of a loan in China but true lender status in the US. Chinese MPL ABS is exposed to both commingling and set-off risks, while in the US, deal structures mitigate commingling risk and set-off risks do not exist at all. A final key difference is that in China the original peer-to-peer lending model is still a major part of the Chinese MPL sector, while it has diminished in the US.
Key similarities, the rating agency suggests, are: big data analytics are used for credit assessments and risk management in both the Chinese and US MPL sectors; the performance of marketplace lenders hasn't been tested through the credit cycle; and the alignment of interest between platform and investors is undergoing a degree of transformation.
16/03/2017 16:04:57
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