[Editor’s note: This is a blog post from CrossLend. CrossLend is a Silver Sponsor at LendIt Europe 2017, which will take place on October 9-10, 2017 in London.]
Back in 2015, CrossLend launched as the only marketplace lending platform that allowed investors to invest in consumer loans originated beyond their domestic borders. Our enabler was single-loan securitisation – transforming loans into notes, on 1 loan:1 note basis. This innovative legal setup cut out much of the red tape that until then had made European cross- border lending virtually impossible, despite the clear investor interest in it.
When we launched, we were naturally well aware of the increasing regulatory obstacles and balance sheet constraints that were making lending ever more complex, restricted, expensive and time-consuming for banks. However, while CrossLend was in a position to profit from legions of borrowers seeking alternatives to bank lending, we recognised that by offering our securitisation services directly to Europe’s banks and alternative lenders and making the issued notes available to investors, we would be opening up the scope for lending across Europe on a much larger scale. Banks would have a means to alleviate their balance sheets, while still lending and retaining their customer base. Alternative lenders would have a means to scale their lending business, while maintaining liquidity. Above all, an end to Europe’s lending gridlock would have a positive knock-on effect for the larger economy, in particular for the small and medium-sized enterprises (SMEs) desperate for financing.
By November 2016, we were engaged in a strategic pivot, actively shifting our focus from B2C to B2B, so we could offer our single-loan securitisation solution to major players on Europe’s lending stage.
Our model clearly had benefits for originators – but what about Europe’s investors? The good news is that investors also stand to benefit from the opportunities inherent in CrossLend’s single-loan backed notes, and here’s how:
Seven compelling reasons to invest in CrossLend’s single-loan-backed notes
#1) Simplified access
Loans are popular with investors due to their history of delivering attractive returns and their non-correlation with public markets, however many European institutional investors face difficulties in sourcing large pools of loans across geographies. Most institutions are neither organised nor appropriately structured to carry out such sourcing – and the complexity increases substantially if the search extends to different kinds of loans located in different countries.
Investing in the single-loan-backed notes available on the CrossLend platform offers you a straightforward way to avoid tedious and cost-intensive opportunity sourcing and 1-to-1 loan purchase negotiations in different legal jurisdictions.
# 2) Flexibility
Our structure enables forward flow investment, which means that loans are made available for investment as they are originated by our originating partners. For investors this enables effective and flexible deployment of capital – even on a daily basis.
# 3) Ease of diversification
Single-loan-backed notes allow for seamless investing across different countries, originator categories and loan types: effortlessly meet your diversification goals by leveraging the CrossLend platform’s reach.
# 4) Transparency
The simple pass-through structure of CrossLend notes allows full access to the anonymised details of each underlying asset – no tranching, no pooling. Plus, your reporting duties are simplified thanks to data points available at your fingertips, around the clock.
# 5) Favourable regulatory treatment
Due to their transparency and the fact that CrossLend notes are not subjected to tranching, regulators may consider them as loans and thus not apply the regulatory risk weight precepts applied to traditional ABS notes.
# 6) Liquidity
Notes are intrinsically easier to sell than loans, simplifying trading. What’s more, CrossLend notes are each given an ISIN, held in collective safe custody with Clearstream Banking Frankfurt and are fully fungible.
# 7) State-of-the-art investment tools
It’s not just our innovative notes that are changing the game for investors – we’re developing a comprehensive, user-friendly investment interface for our platform, incorporating convenient portfolio management and analysis tools to support you in your business. Getting started is easy: a single onboarding is all that’s required to start investing via the CrossLend platform.
We’re looking forward to meeting prospective investors and originators at LendIt Europe. Stop by our stand to learn more about how to participate on the CrossLend platform, or contact us at firstname.lastname@example.org or via our website: b2b.crosslend.com