RateSetter Peer-To-Peer Lender Acquired By Metro Bank

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It’s been a few months, now, since Metro Bank PLC confirmed that it was in talks of acquisition with Retail Money Market LTD, also known as RateSetter. Now, however, the big bank has announced that RateSetter and Metro Bank has agreed to an acquisition deal.

Three-Year Long deal

As it stands now, the deal has been detailed to comprise of an initial consideration of £2.5 million. An additional consideration will be payable after 12 months since the completion, valued at £0.5 million. This, of course, will stand subject to the satisfaction of certain criteria, however. On the third anniversary of the transaction’s completion, a further consideration can be paid, valued at up to £9 million. This, once more, stands subject to certain key performance criteria being met, first, however.

More key stipulations are present, as well. Ratesetter Australia, the Australian holding of RateSetter, will still be retained by the shareholders of the company. However, this is the only exclusion, with the rest of the firm being acquired by Metro Bank.

Massive Gains For RateSetter

Ratesetter stands as one of the most popular peer-to-peer lending platforms within the UK, having been founded back in 2010. As it stands now, RateSetter’s platform hols more than 750,000 users, who have either borrowed or invested within it as time went on. With its financial year, which ended on the 31st of March, 2019, the company reported revenues of £33 million, gross assets of £42 million, and a pre-tax loss of £8 million.

Since the company’s inception, Ratesetter’s business managed to originate a staggering £4 billion in lending. The primary form of loan origination comes from unsecured personal loans. Alongside this, RateSetter also arranges for property financing and secured auto dealer financing, as well. It should be noted, however, that RateSetter itself doesn’t hold any deposits or loans within its balance sheet, due to how it is a peer-to-peer platform connecting borrowers with investors.

Acquisitions To Explore New Markets

Metro Bank had already shown its interest when it comes to expanding within the unsecured lending sector, all in a bid to enhance its prospective returns. With RateSetter coming under its control, Metro Bank will be able to use its underwriting and originating capabilities to fast-track its ambitions. With this acquisition, Metro Bank will gain access to a scalable, existing platform to work with.

With this acquisition, Metro Bank could severely increase its overall lending yield. RateSetter has managed to acquire an average total gross yield of 8% for 2020’s financial year, ending on the 31st of March, 2020. With the first full fiscal year of ownership looming, it’s expected that this net interest margin will increase.

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