RateSetter’s losses deepen in final year as P2P lender
RateSetter’s pre-tax losses doubled in its final year as a peer-to-peer lender, its annual accounts have revealed.
The consumer lender, which was acquired by Metro Bank last year, revealed that it had made a loss of £22.3m in the 12 months to 31 December 2020, according to a document filed with Companies House.
This was a larger loss than the £10m reported in 2019 and was attributed to an £8.9m impairment taken on a £28.1m capital contribution that the company had made to its subsidiaries.
The accounts showed that RateSetter, which is registered at Companies House as Retail Money Market, made a capital contribution of £28m to its subsidiary RateSetter Trustee Services to help it “repay external debt and intercompany liabilities.”
The full value of the investment was later assessed and RateSetter was able to release £19.2m through repaid intercompany loans but it took an £8.9m loss on the contribution.
RateSetter’s income also fell to £11.6m, from £29m a year before, which was attributed to a reduction in loan originations and the 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 accelerated amid the outbreak of the coronavirus pandemic in March 2020.
One option was a strategic trade sale, the document said, and Metro Bank had previously stated that it intended to grow in consumer finance so the combination was a “natural fit.”
Metro Bank’s acquisition was announced in August 2020 and completed in September 2020.
The bank also decided to purchase RateSetter’s legacy loanbook earlier this year, which meant P2P investors were repaid.
“Metro Bank plans to significantly grow RateSetter’s unsecured consumer lending through the RateSetter platform, using the lending and credit management capability RateSetter has built over the last decade,” Rhydian Lewis (pictured), founder of RateSetter, said in the annual report.
“From October 2020 all new unsecured consumer lending was funded by Metro Bank.”
The platform has already sold its remaining property loan portfolio to Shawbrook Bank, while its car dealer finance portfolio was sold to LE Capital UK (Asset 1) Limited.
