Lending Platform RateSetter Reports an Increase in Losses During Last Year as P2P Lender

Lending platform RateSetter’s pre-tax losses have reportedly doubled in its last year operating as a P2P lending platform. This, according to the service provider’s annual accounts.

The consumer lending business, which has been acquired by Metro Bank, noted that it recorded a £22.3 million lost during the 12 months to December 31, 2020. These figures were shared in a document submitted to the Companies House.

For RateSetter, a business that’s registered at UK’s Companies House as a Retail Money Market, this was a considerably bigger loss than the £10 million that was reported back in 2019. According to the company, these losses have been incurred because of an £8.9 million impairment that was taken on a £28.1 million capital contribution that the firm made to its subsidiaries.

The accounts reveal that RateSetter made a total capital contribution of £28 million to its subsidiary RateSetter Trustee Services in order to help it repay external debt as well as intercompany liabilities.

As first reported by P2P Finance News, the aggregate value of the investment has been assessed and RateSetter managed to provide £19.2 million via repaid intercompany loans. However, it had to absorb an £8.9 million loss on the transaction.

RateSetter further reveals that its net income declined to £11.6 million, from around £29 million a year prior. The company says this was due to a decline in loan originations and also a drop in the total loans under administration.

The financial report emphasized that the lender had long-term plans to acquire more funding last year in order to further expand its operations. The company claims that its business had been moving faster during the COVID-19 crisis, which began to significantly impact global businesses around March 2020.

As noted in the report, one of the potential options had been a trade sale and Metro Bank has said that it plans to expand into consumer finance so the combination seemed like a good fit.

As reported, Metro Bank’s RateSetter acquisition had been confirmed in August of last year and finalized by September 2020. Metro Bank had also acquired RateSetter’s loanbook in 2021, so the P2P investors should have been repaid.

Rhydian Lewis, Founder of RateSetter, stated that Metro Bank intends to expand its unsecured consumer lending via the RateSetter platform, by leveraging the lending and credit management solution that RateSetter has developed in the past 10 years.

Lewis added that from October 2020, all new unsecured consumer lending has been funded by Metro Bank. The platform has now sold off all its property loan portfolio to Shawbrook Bank. Its automobile dealer finance portfolio has been sold off to LE Capital UK (Asset 1) Ltd.

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