British Business Bank reveals peer-to-peer losses exceed average in its investments arm

By Oliver Smith on Wednesday 11 March 2020

Alternative Lending

The bank has leant via platforms like Funding Circle, ThinCats and MarketFinance.

British Business Bank reveals peer-to-peer losses exceed average in its investments arm
Image source: British Business Bank.

In response to questioning by former City minister Lord Myners, the government has revealed that the British Business Bank’s investments in peer-to-peer loans are experiencing higher-than-average losses.

The news came from Conservative Lord Callanan, who answered Myners question on whether default rates and losses were greater or lesser than the bank’s overall lending book.

“The level of losses provided for as a percentage of the net amount invested across the peer-to-peer platforms loan portfolio, is above the overall blended level for the British Business Investments’ portfolio,” said Callanan in his written answer.

This is as expected given the different risk profile and structure of the investments across the portfolio, all of which have been assessed within the Bank’s objectives and programme criteria.

Callanan concluded that overall returns from peer-to-peer platforms had been positive, and that the bank hasn’t experienced any negative returns from its peer-to-peer investments to date.

The British Business Bank made a splash in 2013 when it started lending via platforms like Funding Circle, ThinCats and MarketFinance, since then it has invested over £2.18bn via the platforms (as of March 2019).

However the government has been unwilling to disclose the bank’s current exposure to the market, arguing that doing so would be commercially sensitive.

Myners has been increasingly using his position in the House of Lords to question the government’s involvement in the peer-to-peer industry since the downfall of Lendy last year.

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