Assetz chief: Institutions will drive us towards £2bn of lending

Institutional partners will play “a key role” in driving Assetz Capital towards its second billion of cumulative lending, its chief executive has said, after the platform paused new retail-funded loans from its access accounts.

The peer-to-peer lending platform announced this week that it has restricted withdrawals from its access accounts after withdrawals outpaced new investment. It blamed this on rising interest rates which have led its access accounts to become less competitive.

It also said it will not fund any new loans from the access accounts for approximately 12 months.

“In order to complete the funding for all types of projects already underway through all of our active retail loans, we have started to limit withdrawals from the access accounts in order to prioritise all existing loans being fully funded to completion, as you would expect,” chief executive Stuart Law said in an emailed statement.

“No new retail-funded loans will be funded by the access accounts whilst this situation continues, but we will continue to draw on our growing network of institutional partners to fund new lending activity going forward.

“We have already agreed successfully partnerships with institutions like Aros Kapital and Aeon Investments this year, and are continuing to see good demand from new institutional partners for our lending. We expect more announcements shortly and institutional partners will continue to play a key role in driving us towards our second billion of lending.”

Assetz Capital has lent out more than £1.5bn to date, having secured a number of funding lines this year to help it scale up its lending. The platform participated in the government-backed loan schemes during the pandemic, which could only be funded by institutional investors.

The Bank of England base rate has risen to three per cent, leading to increased returns from saver accounts. Many challenger banks offer above 4.6 per cent for a two-year fixed-rate account, including Investec which offers 4.75 per cent.

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In comparison, Assetz Capital’s access accounts currently offer returns ranging between 3.9 per cent and 4.5 per cent, according to its website.

“Over the last year we have finally seen substantial rises in bank interest rates after well over 10 years of them languishing at near zero levels,” Law said.

“This has led to the four to five per cent target interest rate access accounts, a very modest part of our overall funding sources for the last few years, becoming less competitive than they were versus rates offered for some bank savings products.

“We recently raised the rates on the access accounts and saw healthy net inflows of capital for a period. However, after continued Bank of England interest rate rises, the access accounts are currently not attracting sufficient new capital for new lending from that source.”