This is the second deal concluded by the giant US bank within the burgeoning alternative finance space.
Global financial services firm J.P. Morgan Chase & Co. have agreed to acquire nearly $1 billion worth of personal loans arranged by the US market’s largest marketplace lender, Lending Club Corp., according to Nasdaq.
From what we gather, the portfolio - worth just over $900 million and comprised of consumer loans with an average FICO score of about 700 - was sold for a premium to the outstanding balance on the loans.
The US subprime auto lender Santander Consumer USA Holdings Inc. was the former owner of the loans, acquired as part of an agreement with lending Club in July 2013. Santender’s deal was made in March 2013, but disclosed when Lending Club filed for an initial public offering in July. The decision to sell the portfolio follows on from Santander’s plans to scale back its personal loans business.
J. P. Morgan Chase entered into the world of online lending in a major way last December, inking a deal with OnDeck Capital. As part of a pilot-lending project, J. P. Morgan has started lending money to its c. 4 million small business customers via the OnDeck platform last January, but we aren’t aware of any further updates. The bank is clearly committed to expanding its presence in the space.
However, J.P. Morgan is not the only major financial institution attempting to land-grab in the online lending space. Goldman Sachs, Blackstone and Hargreaves Landsdown are also moving in. Last May, Goldman announced its “Mosaic” operation – led by Harit Talwar, former head of Discover Financial Services’ U.S. cards division. Talwar’s outfit is to write loans of around $15k-$20k in size. Similarly, B2R Holdings, a portfolio company of a Blackstone Group LP fund, has also launched into this space and Hargreaves Lansdown is expected to launch a peer-to-peer lending offering in Autumn 2016.
In November 2015, AltFi announced the imminent coming of the “Redcoats”, alluding to the fact that finance’s giants were poised to move into the online lending space. J.P. Morgan has spent the past few months putting rival banks on notice.
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.