Metro Bank in talks to buy P2P lender RateSetter

Metro Bank in talks to buy P2P lender RateSetter

Metro Bank has confirmed that it is in exclusive talks to buy the UK's biggest P2P lender RateSetter.

The move comes just weeks after the P2P lender slashed the interest rate paid to investors by 50% in anticipation of a wave of defaults under Covid-19.

RateSetter says six percent of borrowers have requested a payment freeze and, as a result, it has increased its projected loan losses from £27.5m to £39.2m.

Responding to weekend media speculation of a possible buy out, Metro Bank states: "The company regularly assesses various opportunities in the market and accordingly confirms that it has entered in to a period of exclusivity with RateSetter, but discussions regarding the potential acquisition are at an early stage.

"There can be no certainty at this stage that a formal agreement will be reached, nor as to the terms of any agreement."

The Covid-19 pandemic is upending the business models of alternative lenders, gripped by fears of a rash of payment defaults. RateSetter is not alone in taking action to shore up its business. Lending Works has slashed all rates to zero and banned withdrawals for a 90-day period that ends in July. Funding Circle, meanwhile, continues to pay interest, but has stopped all cash withdrawals by investors.

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