RateSetter’s losses worsen in the past year as a P2P lender

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RateSetter’s pre-tax losses have doubled in its final year as a peer-to-peer lender, its annual accounts revealed.

The consumer lender, which was acquired by Metro Bank last year, revealed it suffered a loss of £ 22.3million in the 12 months leading up to December 31, 2020, according to a filing from Companies House.

This was a larger loss than the £ 10million reported in 2019 and was attributed to an impairment charge of £ 8.9million taken from a capital injection of £ 28.1million that the company had brought to its subsidiaries.

The accounts showed that RateSetter, which is registered at Companies House as Retail Money Market, made a £ 28million capital contribution to its RateSetter Trustee Services subsidiary to help it “repay external debt and intercompany debts ”.

The full value of the investment was then assessed and RateSetter was able to release £ 19.2million through repaid B2B loans, but suffered a loss of £ 8.9million on the contribution.

RateSetter’s revenue also fell to £ 11.6million from £ 29million a year earlier, which was attributed to a reduction in loan origination and a decline in the size of loans under management.

The annual report reiterated that RateSetter had “long-standing plans” to raise additional capital in 2020 to grow the business, which gained momentum amid the coronavirus outbreak in March 2020.

One option was a strategic commercial sell, according to the document, and Metro Bank had previously said it intended to expand into consumer credit, so the combination was a “natural fit.”

The acquisition of Metro Bank was announced in August 2020 and finalized in September 2020.

The bank also decided to buy RateSetter’s old loan portfolio earlier this year, which means P2P investors have been paid back.

“Metro Bank plans to significantly expand RateSetter’s unsecured consumer loans through the RateSetter platform, utilizing the loan and credit management capability that RateSetter has developed over the past decade,” said Rhydian Lewis (pictured), founder of RateSetter, in the annual report.

“As of October 2020, all new unsecured consumer loans have been funded by Metro Bank.”

The platform has already sold its remaining home loan portfolio to Shawbrook Bank, while its auto dealer finance portfolio has been sold to LE Capital UK (Asset 1) Limited.


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