LendingClub’s acquisition of Radius Bank will have a positive impact on the US peer-to-peer lender’s future securitisation deals, according to Moody’s.
The ratings agency gave its backing to the deal, describing it as “credit positive” for LendingClub’s securitisations.
LendingClub announced last week that it had acquired Radius Bank. LendingClub will be able to originate more loans itself, Moody’s noted, so may not have to share revenues with partner banks such as WebBank for referrals.
However, owning and running a bank will bring extra compliance costs, Moody’s warned.
“Future securitisations would benefit if LendingClub no longer uses a partner bank to originate personal loans because cash flow risks from legal and regulatory uncertainties would decline,” Moody’s said.
“Such risks will remain in place for existing securitisations, the underlying loans of which were originated by a partner bank.
“In addition, LendingClub’s improved financial profile, and the increased regulatory oversight that comes with a bank charter, would benefit LendingClub’s outstanding securitisations by reducing the risk of disruptive servicing transfers.”
LendingClub, which focuses on personal P2P loans, has a loanbook worth more than $15bn (£11.6bn) and said the acquisition of Radius Bank will help build “a financial health platform that delivers an integrated customer experience at scale to help members both pay less when borrowing and earn more when saving.”
Radius is an online bank that offers users features such as a personal finance dashboard, which LendingClub said could be used to help make it easier for customers to find and make savings.
“The combined company will engage customers with actionable solutions that empower them to make better financial decisions,” Scott Sanborn, chief executive of LendingClub, said.
“These will be personalised to each individuals needs and will help them keep more of their money, earn higher returns on their savings, reduce their debt faster, and provide an opportunity to invest in others in a seamless and simple way.”