Metro Bank buys British P2P lender RateSetter for £2.5 million
Category: #headlines  By Pranali Mehta  Date: 2020-08-04
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Metro Bank buys British P2P lender RateSetter for £2.5 million

UK-based retail banking company, Metro Bank has decided to purchase distressed P2P lending company, RateSetter for an initial consideration of £2.5 million. According to reliable sources, the acquisition comes just weeks after RateSetter announced to slash the investor interest rate by 50% in expectation of a wave of defaults amidst the Covid-19 outbreak.

Reportedly, six percent of RateSetter’s borrowers have asked for a payment freeze which has further increased its anticipated loan losses to £39.2 million from £27.5 million. Evidently, Metro Bank intends to buy the P2P lending firm for a bargain-basement price of £2.5 million, with a potential £9 million payout after fulfilling the necessary performance criteria on the third anniversary and a £0.5 million due in the upcoming 12 months.

As per the agreement, Metro Bank will take no credit risk for existing loans that are prone to default. Moreover, the buyout does not include the company’s holding in RateSetter Australia which will be retained by RateSetter shareholders.

Additionally, Metro Bank reveals that the acquisition would further its vision to expand its consumer lending business, originating loans under both brands and running RateSetter as an independent platform.

Speaking on the development, Daniel Frumkin, Chief Executive Officer, Metro Bank, said that the ability to improve the company’s offer of unsecured lending to its customers is a significant strategic ambition. RateSetter comes as an established operation with a talented team who have deep knowledge about the industry and a robust technology platform. As a result, this purchase would accelerate the company’s plans while helping it to better suit customer needs. 

Prior to this news, Metro Bank had made headlines when it announced that it has signed a multi-year agreement with Indian IT services company, Wipro. According to the contract, Wipro will bring transformation in Metro’s banking operations by service virtualization, DevSecOps enablement, and automation. This would allow the bank to pace up the quality of its operation while maintaining a better cost.

Source Credit: https://www.finextra.com/newsarticle/36325/metro-bank-acquires-p2p-lender-ratesetter

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Pranali Mehta

Pranali Mehta    

Pranali Mehta boasts of over three years of experience as a content writer. Having completed her graduation in chemical engineering, she worked as safety & environment associate in a chemical company for a year. Harnessing her passion for writing however, Pranali deci...

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